Dáil Éireann Debate, Wednesday - 7 October 2020
62. Deputy Richard Bruton asked the Minister for Finance the tax liability that may arise under income tax, USC and PRSI as a result of persons having received support from the temporary wage subsidy scheme; the way in which the Revenue Commissioners will inform persons of their liability; and if the Revenue Commissioners phase the recovery of taxes due. [29126/20]
Amharc ar fhreagraAs there are considerable differences in each person’s tax circumstances, it is not possible to provide details of the estimated undercharges arising from the taxation of payments under the Temporary Wage Subsidy Scheme (TWSS), nor to estimate the numbers of individuals who may have such undercharges.
The TWSS was legislated for in section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020.
Payments made under the 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, therefore, payments under the TWSS are subject to income tax and USC.
While income tax and the 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 are instead liable to income tax and USC at the end of the year (2020).
Revenue will make a Preliminary End of Year Statement available to all employees in January 2021, including those who were in receipt of the TWSS. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Employment Affairs and Social Protect, as well as their tax credit entitlements. For the tax year 2020, the Statement will also include information on the amounts of TWSS payments, if any, received by each employee. In addition, the Statement will provide employees with a preliminary calculation of the income tax and USC position for 2020 and will indicate whether their 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 will 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 collect the liability by reducing their tax credits over 4 years, interest free. The reduction of tax credits will start in January 2022.
On 25 September 2020, Revenue provided an update, by way of public announcement, as to how any tax liability arising on the TWSS will be dealt with. I am pleased to welcome this fair and flexible approach being taken by and I am confident that Revenue will continue to work with their customers to minimise any financial hardship to the greatest extent possible, noting that because of our progressive income tax system, in the vast majority of cases, the expected tax liability will be modest in scale.
