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Wage Subsidy Scheme

Dáil Éireann Debate, Tuesday - 7 July 2020

Tuesday, 7 July 2020

Ceisteanna (168)

David Cullinane

Ceist:

168. Deputy David Cullinane asked the Minister for Finance if matters raised in correspondence by a person (details supplied) on the calculation of ANRWP, average revenue net weekly pay, for the temporary wage subsidy scheme will receive a response; and if he will make a statement on the matter. [14131/20]

Amharc ar fhreagra

Freagraí scríofa

As previously advised to the Deputy in my reply to his Parliamentary Question on 30 June 2020, the amount of Temporary Wage Subsidy Scheme (TWSS) payable to eligible employees is based on their ‘average revenue net weekly pay’ (ARNWP) for January and February 2020, as returned by the employer to Revenue through the real-time PAYE system. The ARNWP calculation is based on the number of insurable weeks within the January/February period rather than the pay frequency used, as this is a more accurate and consistent method across all types of employees.

In the example referenced by the Deputy, Revenue advise me that there is no underpayment of subsidy. The individual in question was paid for two full months in January and February 2020, which includes nine insurable weeks and the ARNWP is correctly calculated by dividing the total net pay figure for the two-month period by nine. Revenue has informed me that it has reviewed the relevant payroll submissions in respect of the individual and is satisfied that the calculations are operating correctly and in accordance with the rules of the scheme.

Regarding the taxation status of payments made under the TWSS, these amounts are income supports and share the characteristics of income. Therefore, payments made under the scheme are subject to income tax and Universal Social Charge (USC), but not employee PRSI. The TWSS payments are not being taxed in real-time through the PAYE system but a recipient will become liable for tax and USC at the end of the year, which will be calculated by Revenue through the ‘End of Year Review’ process.

The tax and USC deductions of the individual in question are currently being calculated on the ‘week 1’ basis of calculation rather than the ‘cumulative’ basis of calculation. This means that any unused tax credits will be ‘preserved’ until year end and can be offset against any tax or USC liabilities that arise. As previously advised, any additional tax credits such as health expenses may also be used to further reduce or eliminate tax liabilities arising from the payment of the TWSS. Revenue has also assured me that if any tax and USC liabilities still arise following the allocation of unused credits, it will work with persons impacted to collect the outstanding liabilities over an extended period. This will be achieved by reducing their tax credits for future years, thereby minimising any financial hardship to the greatest extent possible.

Finally, Revenue has advised me that it will make direct contact with the person to clarify any queries she may still have regarding how the TWSS entitlements are calculated.

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