Robert Troy (Longford-Westmeath, Fianna Fail)
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34. To ask the Minister for Finance if a person (details supplied) will be taxed on the emergency Covid-19 payment they received for a number of weeks whilst unable to work due to Covid-19 restrictions. [12769/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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Payments under the Temporary Wage Subsidy Scheme (TWSS) are subject to income tax as are Pandemic Unemployment Payments. The Payments under TWSS are also subject to USC while Pandemic Unemployment Payments follows the general taxation rule for social welfare payments and are exempt from that charge.  Amounts paid under both schemes are exempt from PRSI charges in the case of employees.

Revenue has advised me that the person in question initially received PUP payments in April 2020 and transferred to TWSS payments in May 2020. Neither of the schemes is being taxed in real-time through the PAYE system and the person may become liable for tax and USC (for TWSS) at the end of the year. Any liabilities due will be calculated by Revenue through the PAYE End of Year Review process.

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 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 the TWSS and the PUP, including the person in question, on the ‘week 1 basis’ of taxation for the remainder of the year. This ‘preserves’ unused tax credits that can then be used to offset any tax or USC liabilities that arise for 2020.

Finally, Revenue has assured me that if any tax and USC liabilities still arise following the allocation of unused credits, it will work with the person to collect the outstanding liabilities over an extended period. This will be achieved by reducing his tax credits for future years, thereby minimising any financial hardship for him to the greatest extent possible.