Commencing on Friday, 15th January 2021, all individuals registered on ROS MyAccount should receive a preliminary end of year statement for 2020. This statement will outline any latent income tax and USC liabilities arising on the subsidy payments received under the following schemes:

  • The Temporary Wage Subsidy Scheme (TWSS),
  • The Employer Refund Scheme, and
  • The Covid Pandemic Unemployment Payment (PUP)

Revenue has confirmed that all individuals in receipt of these payments must submit an income tax return for the year of assessment, 2020. The individual’s income tax liability may be reduced by claiming additional tax credits, reliefs and expenses due for 2020. Once the tax return is filed, Revenue will have full visibility over the individual’s final tax position for the period.

If the tax liability is less than €6,000, the payment can be collected as follows:

  • The individual can discharge the liability directly through their ROS MyAccount, or
  • The tax can be collected, interest-free, by reducing the individual’s annual tax credits over a four year period, starting in 2022.

If the liability exceeds the €6,000 threshold, Revenue will issue a demand notice, and the liability must be discharged in full by the taxpayer through ROS.

In respect of employees that received the TWSS, Revenue has confirmed that it will facilitate employers who wish to discharge, on behalf of their employees, any latent income tax and USC liabilities arising on the subsidy payments received. In addition, Revenue has clarified that any liabilities, directly or indirectly paid by the employer, will not be regarded as a Benefit in Kind (B.I.K) for tax purposes.

The employer can:

  • Provide the relevant funds directly to the employee. The employee must then use the funds received to discharge their own tax liability through ROS My Account.
  • Amend the December 2020 payroll submission, whereby the income tax and USC liabilities for each qualifying employee will be increased by the amounts specified on the preliminary year end statement. Once the revised payroll submission is filed, a statement will be issued to the employer instructing them to discharge the excess tax liability due for the period.  

However, each employee is still obliged to file an income tax return. In addition, the employer should retain on file supporting documentation outlining the agreement reached with their employees.  Please note that any payments made by the employer in respect of the above will not be regarded as a permissible tax deduction for the business.

If you would have any questions regarding any of the issues raised above, please do not hesitate to contact us on 021 486 1486 or info@MC2group.ie.