Dáil Éireann Debate, Tuesday - 14 July 2020
317. Deputy Cormac Devlin asked the Minister for Finance if the temporary wage subsidy scheme will be reviewed to ensure payments being made to employees are subject to the usual PAYE system rather than allowing potentially significant tax liabilities to develop; and if he will make a statement on the matter. [16103/20]
Amharc ar fhreagraThe legislation underpinning the Temporary Wage Subsidy Scheme (TWSS) provides that payments to employees under the scheme are not taxable in real-time through the PAYE system. As the Deputy will appreciate, this was in keeping with the need to get financial support into the hands of affected workers as quickly as possible.
The subsidy payments remain liable to income tax and universal social charge (USC) in the hands of employees and will be taxed by way of review at the end of the tax year. Taxation of the TWSS payments is necessary from an equity perspective. The TWSS payments are a wage subsidy and taxpayers in receipt of comparable “normal wages” are taxable on those wages. Any top up of a TWSS payment by the payment of some element of normal wages by the employer remains taxable through the PAYE system.
The level of income tax and USC due by an employee may be reduced or eliminated by the amount of unused tax credits available to him at the end of the year. Any liability due may also be further reduced if the person has additional tax credits, for example health expenses, to offset. Revenue has also very recently placed all recipients of TWSS payments on what is known as the ‘week 1 basis’ of taxation for the remainder of the year in order to ‘preserve’ unused tax credits that can then be used to offset any income tax or USC liabilities that arise. Revenue has also assured me that if any income tax and USC liabilities still arise following the allocation of unused credits, it will work with its customers 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.
