Tax sting on Covid cash

Last week’s adjustments to the Government’s Temporary Wage Subsidy Scheme failed to address a major shortcoming – exposing recipients to retrospective tax bills at the end of the year.

That’s according to Marc O’Dwyer, CEO of Big Red Cloud, a leading supplier of online accounts software to the SME market, servicing over 75,000 businesses.

He said that while the Minister had made some necessary – and welcome – changes to allow lower paid workers get more money and to allow those on higher pay access the scheme, he failed to address the elephant in the room which is that workers will have to pay tax on the subsidy payments at the end of the year.

Mr O’Dwyer said the latest changes ‘most likely’ reflected the Government’s realisation that the scheme in its original form would not be taken up to the extent they had hoped.

“If you take the numbers of employers that have actually availed of the scheme of 26,000, as opposed to just having signed up, that’s actually a low percentage of the number of employers in the country – of around 182,000,” he explained.

“At just 14%, I think Government must be disappointed with the take up, and these tweaks to the scheme are very telling in trying to close the gap between the TWSS and the Social Welfare Pandemic Unemployment Benefit.”

In effect, the changes mean that all employees earning between €412 and €960 can qualify for a TWSS of €350. That was clearly the objective of this exercise in an attempt to level the TWSS with PUP.

Last week’s revision of the rules mean that employees on an average weekly salary of up to €412 (€24.4K pa) have the subsidy raised from 70% to 85% ie €350.

For more, read this week’s Connacht Tribune.

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