As ever, new items to report and clarifications to be made.
Revenue have published Version 3 of their Temporary COVID-19 Wage Subsidy Scheme document. You can find that in the Hot Topics section of the Revenue website. It is worth reading, particularly for accountants and payroll advisers.
Key clarifications in Version 3 and from our meeting with Revenue today are:
- For March at least, where the Employer Contribution (top-up) plus Wage Subsidy exceed the Average Revenue Net Wage, revenue will reduce the value of the subsidy for the employee.
- Please note that depending on the data revenue have for Jan and Feb, and the employee tax position, being on the scheme may result in a lower take-home pay than the employee is used to.
- Employers planning to use the wage subsidy scheme should do so in consultation with their employees. The scheme effectively caps the employee income, sometimes less than their regular income, and will result in a tax liability later in the year.
- Deletions and re-submissions of J9 scheme payslips will be permitted. Where that causes a double refund Revenue will contact the employer directly to clarify what happened and how the double refund will be balanced out.
- If you do need to make a re-submission, make sure to resubmit. Don’t delete and then submit again. Contact us if you need help with this.
- Unchanged, but worth nothing again: The subsidy in the payroll is not taxable, but it is still reckon-able income and liable for tax at the end of the year. Please advise the employees as such.
- Please also be aware that the Employer Contribution should be entered directly as a gross figure. It should not be “grossed-up” as some consultancy firms are advising. Grossing up the maximum employer contribution amount can lead to the contribution exceeding the Average Revenue Net Wage threshold. This will reduce or negate the subsidy.
- Regarding Childcare – DCYA and Revenue are meeting today to discuss how their scheme might work. It’s too early to implement this yet.
- More clarity has been added about the eligibility requirements for companies. Copying the Collector General advice.
- There should be no deductions made that reduces the value of the Subsidy passed to the employee. For instance pension contributions, salary sacrifices etc.
- The latest instruction from the Department of Finance is that employees who are going on the COVID-19 Payment Unemployment Payment should be ceased in the pay run. See below for more info.
- Revenue plan to issue a CSV file to all employers on the 20th April. The file will contain the Average Revenue Net Wage, Maximum Subsidy and Maximum Employer Contribution for each employee. Until then, use your own calculated amount based on the Hot Topics examples.
COVID-19 Pandemic Unemployment Payment
This has bounced around a bit. The current instruction from the Department of Finance is that if an employee is going on the COVID-19 Pandemic Unemployment Payment with the DEASP then they should be ceased in Payroll. That means sending a cessation date to Revenue via the payroll system.
DEASP don’t actually use the cessation date, but they do look at the employer payments. If someone is in receipt of an income from an employer then they will be removed from the PUP scheme. They will be considered to have found employment.
It would be safest to cease the employee to eliminate any accidental payment.
The Dept. of Finance took pains to point out that a cessation in payroll does not mean the employee has been made redundant from the company, just that they’re not on payroll.
Previous post here.