Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Deputy for raising this matter. I might take this opportunity to provide a recap on the wage subsidy schemes that were a central pillar of the Government's response to the Covid-19 pandemic. The issue raised by the Deputy has been raised with me and I know a number of people are in similar situations.

Covid-19 had a sudden and profound impact on the economy with the introduction of public health restrictions across all sectors of the economy, except for those businesses classified as essential services. In response, the TWSS was introduced in March 2020, with the objective of supporting viable firms and maintaining the relationship between employers and their employees. At the outset, it was expected that the TWSS would be in place for a period of 12 weeks. However, given the novel circumstances and the evolution of the situation, it was soon recognised that the measure should remain in place until August 2020. The TWSS was replaced by the EWSS with effect from 1 September 2020.

The EWSS continued to operate as an economy-wide support until the scheme ended on 31 May this year.

The total level of support provided by the wage subsidy schemes was unprecedented at around €10.8 billion, with €2.9 billion in respect of the TWSS and €7.9 billion in respect of the EWSS. Over 66,500 employers were supported through the TWSS, assisting 664,000 employees. The EWSS supported 51,800 employers in respect of almost 746,000 employees.

On the specific issue raised by the Deputy regarding the taxation of EWSS, such payments were taxed in real time in the hands of employees in the same way as normal pay is taxed. EWSS payments were made directly to employers as a per-head subsidy. In turn, they paid their employees. Under the EWSS, as the payments were taxed as they were paid, no undercharges of tax should arise for an employee. However, the position as regards the TWSS was different. Payments made under the TWSS were regarded as 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 were subject to income tax and the universal social charge, USC.

While income tax and USC on most income are deducted in real time as and when the person is paid, the TWSS payments were not taxed in real time and were instead liable to income tax and USC at the end of 2020. Therefore, tax was not collected while the scheme was in operation to maximise the amount of financial support provided to recipients at a time when it was considered most needed. Instead, liability to tax was determined by way of review at the end of the year.

The tax treatment of TWSS payments was set out in the legislation underpinning the scheme, the Emergency Measures in the Public Interest (Covid-19) Act 2020. The Government was consistent as regards the tax liability of TWSS payments from the outset. Indeed, I have been advised by the Revenue Commissioners that it clarified the tax treatment of the TWSS at employee level in the guidance material on the TWSS that it published on its website since the commencement of the scheme.

The Revenue Commissioners made a preliminary end-of-year statement available to all employees from 15 January 2021, including those who were in receipt of the TWSS. The statement, which is based on information available on Revenue records, includes information relating to an employee's income received, including pensions and income from the Department of Social Protection, as well as their tax credit entitlements. When I have an opportunity to respond to the Deputy's supplementary remarks I will try to provide further information.

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