Dáil Éireann Debate, Thursday - 8 September 2022
362. Deputy Louise O'Reilly asked the Minister for Finance if he will confirm the arrangements in place for employees who worked full-time during the pandemic where their employer was in receipt of a wage subsidy and topped up the employee's wage to their normal full-time wage and are now faced with a tax bill for unpaid tax during this period; if the liability is for the employer or the worker; and if he will make a statement on the matter. [42706/22]
View answerThe Temporary Wage Subsidy (TWSS) was in place between 26 March and 31 August 2020 and was introduced as an emergency income support for employees of vulnerable firms whose businesses had been negatively impacted by COVID restrictions and whose turnover had reduced by at least 25% during Q2 while the strictest public health measures were in place. The support was paid via the employer so as to maintain employment links between the employee and employer insofar as was possible and, to that end, the rate of Employers' PRSI was also significantly reduced to 0.5%. It should be noted that there was no legal requirement for a minimum amount that the employer had to pay as a normal wages payment to an employee to top up the wage subsidy.
Payments made to employees under the TWSS were regarded as income supports and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages. In the interest of equity, therefore, payments under the TWSS were subject to income tax and the Universal Social Charge for the employee. While income tax and USC on most income is deducted in real-time as and when the person is paid, the TWSS payments were not taxed in real-time and were instead liable to income tax and USC at the end of 2020.
I am advised that Revenue has made a Preliminary End of Year Statement available to all employees, including those who were in receipt of the TWSS, in respect of 2020. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Social Protection, as well as their tax credit entitlements. For the tax year 2020, the Statement also includes information on the amounts of TWSS payments, if any, received by each employee. In addition, the Statement provides each employee with a preliminary calculation of the income tax and USC position for 2020 and indicates whether the employee’s tax position is balanced, underpaid or overpaid for the year.
Upon viewing the Preliminary End of Year Statement through MyAccount, which is Revenue’s secure online facility for individual taxpayer services, employees have an opportunity to update their personal record, declare any additional income and claim any additional tax credits due, for example qualifying health expenses, to arrive at their final liability for 2020.
Where a liability is finalised, individuals may opt to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in MyAccount. Where individuals do not opt to fully or partially pay, Revenue will generally collect the liability by reducing their tax credits over 4 years, interest free.
While the income tax and USC liabilities arising from TWSS payments were that of the employee, I am advised that Revenue also facilitated employers who wished to pay some or all of the employees' 2020 TWSS-related tax and USC liabilities. Where the employer opted to pay, Revenue did not apply benefit-in-kind rules to these payments. It should be noted that this concession was initially limited to payments made by employers on behalf of their employees up to end June 2021, but was extended until the end of September 2021. Further details on this facility are available on the following revenue link:
www.revenue.ie/en/employing-people/twss/employers/index.aspx
The TWSS was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020. However, the EWSS was paid directly to eligible employers in respect of qualifying employees and, consequently, EWSS re-established the normal requirement to operate PAYE in real-time on salary paid to the employee by the employer. This ensured employee social insurance contributions accumulated as normal and furthermore, that no additional tax or USC liability accrued on the salary payments made to employees.
