From top: Pandemic Unemployment Payment form; Catherine Murphy
Social Democrats co-leader Catherine Murphy , in a written question, asked the Minister for Finance Paschal Donohoe to reveal what orders he has given to the Revenue Commissioners regarding tax liabilities for recipients of the wage subsidy scheme and the Pandemic Unemployment Payment PUP) .
The Minister for Finance responded:
On 25 September in a public announcement Revenue set out how any tax liability arising on the Temporary Wage Subsidy Scheme (TWSS) and the Pandemic Unemployment Payment (PUP) will be dealt with.
Revenue officials sent a copy of its press release to my Department for information prior to publication. There was no instruction from me or my officials to Revenue in relation to this matter.
While the expected tax liability should be modest in most cases, the position as set out by Revenue is very welcome and is a further demonstration of how we will continue to work to minimise financial hardship to the greatest extent possible on taxpayers challenged by COVID-19.
While most income is liable to income tax and the Universal Social Charge (USC) and is deducted in real-time as and when the person is paid, the TWSS and PUP payments were not taxed in real-time and are instead liable to income tax and USC at the end of this year.
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 or PUP. 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, Community and Rural Development, and the Islands, as well as their tax credit entitlements.
For the tax year 2020, the Statement will also include information on the amounts of TWSS/PUP 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.
Previously: Liable To Income Tax And PRSI