covid wage subsidy scheme taxation

Tommy Max

In regards the processing of monthly salary employees under the covid wage subsidy scheme, how is this taxed?


for example, employee average weekly net is €700. the subsidy covers €350. if the company top up the remaining €350 to bring it in line with what the employee usually receives net weekly, how is this taxed?


Am I right in saying this is taxed on the employee at year end. so it's not in truth a real net pay as the employee has yet to be taxed on it.


The revenue guidance is not clear on that area. 


Hope some others with a good knowledge of this can assist?

Stratvs

The €350 top up is treated as a gross amount and is taxed/usc'd accordingly. (No PREI EE as on J9).
Revenue have said that any Tax/USC refund caused by this should be repaid to the EE and they will refund the ER along with the subsidy.
The subsidy is not taxed real time but is taxable so depending on income overall and other year end items such as medical exps etc. an underpayment may arise. Revenue have said they will look on this in a reasonable manner and such amounts will be deducted from tax credits in following years.
Unless Revenue change the RPN to W1/M1 the cumulative basis should continue. They want the EE to get any tax due to them and deal with an u/pay't later.

FAQ V5.0 is very helpful in explaining this. Especially parts 3.11 & 4.12

https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf

Tommy Max

Stratvs wrote: »

The €350 top up is treated as a gross amount and is taxed/usc'd accordingly. (No PREI EE as on J9).
Revenue have said that any Tax/USC refund caused by this should be repaid to the EE and they will refund the ER along with the subsidy.
The subsidy is not taxed real time but is taxable so depending on income overall and other year end items such as medical exps etc. an underpayment may arise. Revenue have said they will look on this in a reasonable manner and such amounts will be deducted from tax credits in following years.
Unless Revenue change the RPN to W1/M1 the cumulative basis should continue. They want the EE to get any tax due to them and deal with an u/pay't later.

FAQ V5.0 is very helpful in explaining this. Especially parts 3.11 & 4.12

https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf

My employer wants me to use accrued annual leave while laid off in April. it also appears that I will be made redundant in May as a result if the downturn.

Am I right in thinking I would be better off getting lieu payment of annual leave accrued in May and not taking it now while laid off under the scheme as it will in reality only be a gross top up not net.

keithkk16

I'm currently working 24hrs a week and get paid minimum wage, but my payslip says something completely different the last 3 weeks now. The last 2 weeks I got paid as normal for the hours I worked, but my payslip said I should be getting a different amount. This week though I got paid for the hours I worked plus an extra €35ish. I'm a bit confused as to what's going on and my boss isn't much help either, I've heard from another person I work with that we have to pay anything extra we get back later in the year in tax If anyone could help with telling me what exactly is happening with my payslips that would very much appreciated

Blub123

Under the Covid 19 Wage subsidy scheme, the employees will be getting a subsidy from the state, which will be paid via the Company's payroll.
This subsidy is not being taxed at present and is up to €350 per qualifying employee per week. Where the employer is topping this payment up, the wages they are being paid uses up their tax credits, the lower rate tax band and in instances gives a tax refund for the month.
At the end of the year Revenue will assess this subsidy as part of their wages and most employees will end up with a tax liability which they are personally liable for. All employees should be advised of this situation as it is a personal liability on them. The Employees can request Revenue to put them on a week one/month one basis as this will reduce the liability they will have to pay substantially. Alternatively they should put aside the money for the additional tax they will have to pay.