The COVID-19 legislation provides for the operation of a Wage Subsidy Scheme for employers (Section 28 of the Act).

Employer eligibility

Businesses with significant cash reserves will not necessarily be disqualified from the scheme.

During Dáil debates on the legislation, the Minister for Finance addressed some of the deputies’ points on employers’ eligibility for the scheme. Responding to Deputy Michael McGrath’s comments on businesses having cash for operating expenses and investments, the Minister said: “Deputy Michael McGrath presents the concept that the presence of cash reserves would in some way debar a company from participating in the scheme. I do not believe that will be the case. I think it is very possible that companies will have cash reserves, precisely for the reason the Deputy refers to, that they have costs coming up that they know they need to meet.”

Per Revenue guidance, eligibility for the Scheme will initially be determined largely on the basis of self-assessment and a declaration by the employer concerned. A key indicator is that there is to be an expected decrease in turnover by 25% for Q2 2020. This decrease can be gauged by reference to Q1 2020, for example, or against another reasonable reference period.

The Institute recommends that employers maintain any supporting records that clearly show the negative economic impact to their business arising from COVID-19. This will simplify the handling of any follow up discussions or checks by Revenue after the crisis. Examples of the types of documentary evidence are set out in the Revenue guidance.

Publication of employers

There has been some commentary regarding the publishing of the names of employers availing of the scheme. We understand that some businesses may have reservations about this. However, almost every business in the country is affected by the COVID-19 crisis; the list will be published after (and not during) the scheme; and there is precedent for companies that benefit from tax-administered schemes, such as the EIIS, to feature on lists of beneficiaries.

Treatment of employer top-up payments

Under the terms of the scheme, an employer can make an additional payment or ‘top-up payment’ to their employee to fully or partially make up the difference between the amount provided by the subsidy scheme and the employee’s Average Net Weekly Pay. According to updates to Revenue’s FAQs (Section 1.6), such additional payment cannot be re-grossed; the payment is treated as gross pay and liable to income tax and USC, according to the employee’s tax credits and rate bands.

The legislation (Part 7) is silent on the calculation of the ‘top-up payment’ and the treatment of such payment, so much depends on Revenue’s operation of the scheme and its guidance. Such guidance is updated regularly, and the FAQs are at version five following their initial publication two weeks ago. We therefore recommend that members review the current Revenue guidance and watch out for our timely updates, which are published on the Chartered Accountants Ireland COVID-19 Hub. We will continue our regular engagement with Revenue and other government agencies to clarify the operation of the scheme and other related tax measures.

Revenue also added examples to the FAQ document (Sections 4.4.1, 4.4.2, 4.4.3) showing how to calculate the average net weekly pay, the impact of the ‘top-up payment’ on the amount of the subsidy the employer will receive and the PRSI class. It is worth reviewing the examples to better understand how Revenue is operating the scheme. Please also bear in mind that the Temporary Wage Subsidy Scheme is a Government measure to provide financial assistance to employers and support their efforts to retain employees. Any payments or repayments to Revenue under the scheme are to/from employers, not to and from employees.

Revenue reconciliation

Some details on the Revenue reconciliation of refunds received and amounts due to employers under the scheme are included. Revenue say that further details on how they will administer the reconciliation and recover any amounts owing to them will be published in due course.

Dealing with Revenue

Readers with queries on the COVID-19 Wage Subsidy Scheme may wish to contact Revenue on the National Employer Helpline (01 738 3638). We gather that this telephone service from Revenue, as well as the ROS Technical Helpdesk, is open. All other telephone services from Revenue are closed for the crisis period.

Clarifications from Revenue:

• The period for the calculation of the employee’s average net weekly pay is January and February 2020 based on payroll submissions made to Revenue by the employer by 15 March 2020. The average net weekly pay is calculated using the values in the payroll submission for each pay date in January and February 2020. For more information, refer to 4.3 and 4.4 of Revenue’s FAQ and Section 28(6) of the COVID-19 Act 2020.
• A temporary wage subsidy shall not be paid to an employer in relation to a specified employee where the amount of the net weekly emoluments of that employee is in excess of €960 per week, as stated in Section 28 (6)(f) of the COVID-19 Act 2020. However, in the calculation of the average net weekly pay, there may be a number of pay dates where the net weekly pay was in excess of €960. This will influence the result but unless the average net weekly pay for the period is in excess of €960 the employee is eligible.
• The average net weekly pay used in the calculation of the wage subsidy will be based on the pay information reported to Revenue. Bonuses and once-off payments reported in this period will be taken into account if these were included as gross pay in the January and February 2020 payroll submissions.
• Where the net weekly emoluments that would have been payable prior to the COVID-19 pandemic exceed €586 per week but are less than €960 per week, the amount of the temporary wage subsidy will ultimately be an amount determined by the Minister.