Revenue has confirmed that the corporation tax surcharge suspension stands for the 23 September deadline and the income tax pay and file deadline for online filing is extended from mid-November to 10 December.
The extension is only available to taxpayers that can both pay and file through the Revenue On-Line Service (ROS) and, therefore, those that cannot afford to pay their preliminary tax for 2020, and their final 2019 tax liability, will have an effective 31 October deadline.
The application of a surcharge for late CT1 Corporation Tax returns for accounting periods ending on or after June 2019 is suspended until further notice. There had been suggestions that this concession would be withdrawn.
Following lobbying by the profession, it has now been confirmed that it will continue until at least the 23 September 2020 deadline. More details here.
Temporary wage subsidy
Revenue has announced that all employees will be issued with a year end statement, which for employees in receipt of the temporary wage subsidy is likely to show a substantial liability due to Revenue.
The liability can be repaid interest-free over four years or employees can fully or partially pay any income tax and Universal Social Charge liability through the Payments/Repayments facility on Myaccount.
If the employee chooses to repay over four years, repayments will start in January 2022. The liability can be reduced by any unclaimed tax credits, such as Home Carer Tax Credit. Many families may now qualify for this if one spouse was on layoff and was at home looking after their own children or monitoring or caring for an elderly parent.
Other credits that may reduce the liability include health expenses, the Stay and Spend Scheme or e-Working and Tax credit, which is based on utility bills time-apportioned for the number of days spent working from home.
The maximum liability that would accrue to an average PAYE worker on the higher tax band, all other taxes and credits being correct already, is 23 weeks at €350 per week, which works out around €75 of a repayment per month for four years commencing January 2022.
Every taxpayer will have different circumstances and, for example, workers in receipt of the higher €410 weekly subsidy amount are probably on the lower tax band and will therefore have a lower refund amount.
The temporary wage subsidy is a pass-through subsidy and has the effect of reducing the wages bill for the employer. That reduced wage bill will potentially result in taxable profits or, at a minimum, reduced losses. The subsidy for a business will result in additional tax bills either in the form of actual tax payable or reductions in the quantum of loss claims brought forward.
The Temporary Wage Subsidy Scheme ended in August and was replaced on 1 September by the Employment Wage Subsidy Scheme, which is a direct subsidy to employers and will not affect the taxation position of the employee.
An employee who is temporarily laid off has an entitlement to be made redundant after four weeks or more of layoff, or six weeks in the last 13 weeks of layoff. This was suspended by government during Covid-19 with that suspension valid up until 17 September.
Anyone put on layoff or short-time hours because of Covid-19 cannot claim for redundancy during this period. S.I. No. 349/2020 has now increased the suspension period up to 30 November 2020.