No tax amnesty for those who availed of pandemic unemployment payments or the wage subsidy scheme

Government confirms outstanding tax will have to be paid, but Revenue won’t start collecting it until January 2022

Minister for Finance Paschal Donohoe. Picture: Collins

Anne-Marie Walsh and Cormac McQuinn

THERE will be no tax amnesty for those on state income supports during the pandemic - but they can stretch their repayments over four years.

Thousands of people who availed of the government’s pandemic unemployment payment or wage subsidy scheme will not have to start paying back any outstanding tax until 2022.

Details of the tax treatment of their incomes were unveiled by the government today.

Most income is liable to income tax and USC and is deducted when an employee is paid by their employer.

However, temporary wage subsidy scheme and pandemic unemployment payments were liable for income tax and USC at the end of this year.

Minister for Finance Paschal Donohoe said he did not have an overall figure for the total tax bill due but said most individual underpayments will be “modest”.

Research by found that employees on the wage subsidy who got a top up from their employer will face a tax bill between €300 and €2,829 at the end of the year.

This ranges from €309 for a worker in the hospitality sector on €21,008 a year to €1,334 for a construction worker on €35,000, and €2,829 for a chief operating officer on €115,000.

Mr Donohoe said the Revenue Commissioners’ confirmation that outstanding liabilities would be collected over an extended period would significantly ease any potential burden on those with a tax liability.

“I don’t believe an amnesty would be appropriate for this,” he said.

“The way we’re dealing with this, the issue of tax that is due across the period of this crisis is allowing the tax to be paid over as many years as possible.

“It’s how were dealing with the issue of the warehousing of tax liabilities, and it continues to be important that we can demonstrate to all citizens that regardless of how income is made available it will be taxed in the same way.”

Revenue will issue a preliminary end of year statement to recipients outlining whether their tax position is balanced, underpaid or overpaid for the year.

They can partially or fully pay any income tax or USC owed through myAccount online. Otherwise, Revenue will collect it over four years from January 2022.

The employment wage subsidy scheme is a flat rate payment directly to employers whose turnover is less than 70pc of what it was last year.

It can be used to recruit new hires and seasonal workers.

Employers also benefit from a significantly reduced rate of PRSI of 0.5pc.

Mr Donohoe revealed that 82pc of employers on a previous temporary wage subsidy scheme have now signed up to the new employment wage subsidy scheme.

A total of 36,746 employers have registered for the scheme.

Mr Donohoe said the scheme remains open to employers for applications.

Meanwhile, he said he envisaged a safe and phased return to offices by workers, even on a part-time basis, next year.