Dáil Éireann Debate, Thursday - 30 July 2020
347. Deputy Ged Nash asked the Minister for Finance if he will provide details relating to the issue of liability for income tax on employees availing of the temporary wage subsidy scheme; the way in which the liability for tax owed will be treated; and if he will make a statement on the matter. [20487/20]
Amharc ar fhreagra348. Deputy Ged Nash asked the Minister for Finance if he will provide details relating to the issue of liability for income tax on employees availing of the pandemic unemployment payment; the way in which the liability for tax owed will be treated; and if he will make a statement on the matter. [20488/20]
Amharc ar fhreagra357. Deputy Pearse Doherty asked the Minister for Finance the way in which tax liability outstanding for payments received through the temporary wage subsidy scheme will be collected in cases in which the liability exceeds the value of unused tax credits for 2020; if that outstanding liability is to be collected against future tax credits; if so, the time period; and if he will make a statement on the matter. [20745/20]
Amharc ar fhreagraI propose to take Questions Nos. 347, 348 and 357 together.
Payments made under both the Temporary Wage Subsidy Scheme (TWSS) and the Pandemic Unemployment Payment (PUP) scheme are 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, payments under the TWSS and the PUP are subject to income tax. Payments under the TWSS are also subject to universal social charge (USC), while the PUP follows the general taxation rule for social welfare payments and, thus, is exempt from that charge. Payments under both schemes are exempt from PRSI charges.
Neither PUP nor TWSS payments are taxed in real-time through the PAYE system, but a recipient of either payment may become liable for income tax and USC (for TWSS only) at the end of the year, which will be calculated by Revenue through the end of year review process.
In cases where the tax liability for those payments exceeds unused personal and PAYE tax credits for 2020, the level of tax and USC due by the person may be reduced or eliminated by the amount of unused tax credits available to him or her 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 or the PUP on what is known as the “week 1 basis” of taxation for the remainder of the year so as to “preserve” unused tax credits that can then be used to offset any income tax or USC liabilities that may arise at end year.
I am advised by Revenue that the final calculation of the end of year tax liability for each person is dependent on a range of factors, including the person’s civil status, their available tax credits, the amount received under TWSS and/or PUP, any top-up payments made by the employer, as well as other entitlements and credits, such as health expenses. Revenue has also assured me that if any tax and USC liabilities still arise at end year 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.
