Wage Subsidy Scheme Issues

blackwhite

shatners bassoon wrote: »

Thanks for the replies

I had originally thought I could top up to whatever gross pay was required but that if the top-up was in excess of the ANWP then tapering would apply and the subsidy would be reduced by the amount we went over. I wouldn't have a problem with this.

Revenue advised today however that the ANWP is the 'red line' and that if we pay them over that then no subsidy is payable at all. They said the tapering occurs 'within the parameters of the ANWP'.

The description of "tapering" is a red herring.

Say someone has a ARNWP of €750 - but their normal gross is actually €810.

Under the scheme you can claim a max subsidy of €350 for that person, and top them up by another €400. That gives them a total pay of €750 before taxes.

If you decide to top them up by €450 - then the maximum subsidy is reduced to €300 by tapering - so the total pay stays at €750.

The employee will have marginally less take-home pay now (due to paying tax and USC via PAYE on the €450 instead of €400) - but will have a slightly lower tax bill when the end of year reconciliation is done. After the year-end reconciliation there won't be a cash difference for the employee (ignoring time-value of money, etc.)


On the other hand, by paying the higher top-up, the employer is out an extra €50 for no benefit to the employee - and also ends up paying employers' PRSI (at the reduced rate of 0.5%) on €450 instead of on €400.

The tapering works the exact same way all the way until the top-up is €750, and the subsidy is zero - at which point you've just taken the employee of the TWSS.

There's no way to leave an employee in a situation where Top-Up plus Subsidy is higher than ARNWP (unless ARNWP was less than €350 - in which case you can bring their total up to €350).

collsoft

Black White is correct here in his examples, but there is one other subtle point to be aware of.

He gave the example of where the employer decided to top them up to €450 which resulted in a tapered subsidy of €300 and a total payment to the employee of €750 - that is all fine.

But you need to also consider that in this case there are actually 3 different tiers of subsidy available to the employee, and the highest available is €350.

If in this example the employer decided to top up by an additional euro to €451 this drops the employee into a different tier where the subsidy available is now only €205.

In this case the total payment is now €451 + €205 = €656 which is now significantly lower than the €750 mentioned before

blackwhite wrote: »

The description of "tapering" is a red herring.

Say someone has a ARNWP of €750 - but their normal gross is actually €810.

Under the scheme you can claim a max subsidy of €350 for that person, and top them up by another €400. That gives them a total pay of €750 before taxes.

If you decide to top them up by €450 - then the maximum subsidy is reduced to €300 by tapering - so the total pay stays at €750.

The employee will have marginally less take-home pay now (due to paying tax and USC via PAYE on the €450 instead of €400) - but will have a slightly lower tax bill when the end of year reconciliation is done. After the year-end reconciliation there won't be a cash difference for the employee (ignoring time-value of money, etc.)


On the other hand, by paying the higher top-up, the employer is out an extra €50 for no benefit to the employee - and also ends up paying employers' PRSI (at the reduced rate of 0.5%) on €450 instead of on €400.

The tapering works the exact same way all the way until the top-up is €750, and the subsidy is zero - at which point you've just taken the employee of the TWSS.

There's no way to leave an employee in a situation where Top-Up plus Subsidy is higher than ARNWP (unless ARNWP was less than €350 - in which case you can bring their total up to €350).

shatners bassoon

blackwhite wrote: »

The description of "tapering" is a red herring.

Say someone has a ARNWP of €750 - but their normal gross is actually €810.

Under the scheme you can claim a max subsidy of €350 for that person, and top them up by another €400. That gives them a total pay of €750 before taxes.

If you decide to top them up by €450 - then the maximum subsidy is reduced to €300 by tapering - so the total pay stays at €750.

The employee will have marginally less take-home pay now (due to paying tax and USC via PAYE on the €450 instead of €400) - but will have a slightly lower tax bill when the end of year reconciliation is done. After the year-end reconciliation there won't be a cash difference for the employee (ignoring time-value of money, etc.)


On the other hand, by paying the higher top-up, the employer is out an extra €50 for no benefit to the employee - and also ends up paying employers' PRSI (at the reduced rate of 0.5%) on €450 instead of on €400.

The tapering works the exact same way all the way until the top-up is €750, and the subsidy is zero - at which point you've just taken the employee of the TWSS.

There's no way to leave an employee in a situation where Top-Up plus Subsidy is higher than ARNWP (unless ARNWP was less than €350 - in which case you can bring their total up to €350).

Thanks, this explains it perfectly. Why would any employer ever get into tapering if it doesn't allow them to increase the employee's pay and reduces the subsidy they get back from Revenue?

I suspect there are a hell of a lot of employers in for a rude awakening.

collsoft

I think the big problem is that TWSS was an emergency scheme designed to support employees as things were closing down.

It is now tried to be used as a means to resuscitate employers as they try to recover from the shutdown - and its just not designed for this task.

It will be very interesting to see what comes in this July Initiative

Noel-z

Ha. Here was his response to my Query

On the Wage subsidy scheme that can not be done as once we start increasing the gross salary then we start losing some of the subsidy that we receive.
For every euro that we add on to the Gross we lose a euro of the wage subsidy so the additional amount is just classed as expenses in the accounts.
This will most likely not be an issue going forward as chances are June is the last month on the wage subsidy so from the end of July it will be back to normal.

My guess is he put the subsidy into the gross section also??

Noel-z

Pistachio19 wrote: »

The top up amount can of course be shown on the payslip.

Ha. Here was his response to my Query

On the Wage subsidy scheme that can not be done as once we start increasing the gross salary then we start losing some of the subsidy that we receive.
For every euro that we add on to the Gross we lose a euro of the wage subsidy so the additional amount is just classed as expenses in the accounts.
This will most likely not be an issue going forward as chances are June is the last month on the wage subsidy so from the end of July it will be back to normal.

My guess is he put the subsidy into the gross section also??

collsoft

Hi Noel-z,

It is a requirement from Revenue that the wage subsidy is clearly shown on your payslip, and the suggested description is "GovC19 WageSub". Speciffically the guide says that

"The employer must include the subsidy as part of the employees’ wages and show the amount of the subsidy paid to the employee on the employee’s payslip. This should be labelled as "GovC19 WageSub" on the payslip."

See Page 8 of the Revenue FAQ here>>

What your employer described as the subsidy being reduced if he topped you up is a process called "Tapering", but the way he described it to you is not 100% correct, but Im not going to get into that now.

If your employer is topping your pay up using "expenses" then he had better hope that he does not have an audit because he likely to have created quite a problem for himself. I am assuming that this is really pay rather that genuine out of pocket allowable expenses.

But anyway, that's a whole other story!!

Noel-z wrote: »

Ha. Here was his response to my Query

On the Wage subsidy scheme that can not be done as once we start increasing the gross salary then we start losing some of the subsidy that we receive.
For every euro that we add on to the Gross we lose a euro of the wage subsidy so the additional amount is just classed as expenses in the accounts.
This will most likely not be an issue going forward as chances are June is the last month on the wage subsidy so from the end of July it will be back to normal.

My guess is he put the subsidy into the gross section also??

Kewreeuss

It is a bind alright.
An employee does a couple of extra hours, earns 50 euro more.
if he is already getting his max top up and the 50 is added on, the subsidy is reduced by the 50 but his net pay stays the same. He's going to say I worked more, why aren't I getting it?
The allowed top up and the 50 extra go into his cumulative annual gross pay and he will also end up paying tax on it later .
Would it be easier to set up a spreadsheet and keep an record of the 50 and pay it later when the scheme is ended? At least when he eventually gets paid the extras he would see the gross and see the taxes being paid and understand the net.

Seve OB

Noel. As Collsoft has pointed out you employer is wrong. He is knowingly false accounting by the sounds of it. Unless they are genuine expenses which would need to be vouched (which I doubt unless he is producing false receipts) then he could find himself in very hot water.
It is not your concern how he runs his business but your pay is your concern. Make sure he does it correctly as it clearly affects you going for loans etc. If he refuses and if it was me, I’d tell him he has to or you will be forced to make an official complaint with the WRC, which I’m sure your rather not have to do.
Oh and document everything, writing or email if you can.

Burlap_Sack

My payslip has approx 1200 under basic pay and 1500 under subsidy yet I payed zero in tax. My net is the same but will I lose out on a large chunk to the tax at the end of the year? My gross before would have been roughly 3300.

shatners bassoon

Sounds like your employer is taking your net pay and working back from there, adjusting the top-up to the subsidy until they get the right net figure.

Two issues here - you're not paying tax on the subsidy portion which will be payable at the end of the year and also, you may well be getting a PAYE refund which isn't being passed on to you.

PickYourName

Noel-z wrote: »

For every euro that we add on to the Gross we lose a euro of the wage subsidy so the additional amount is just classed as expenses in the accounts.

I'm no accountant, but that is flat out wrong. It's not "expenses", it's "wages", the difference being it's supposed to be declared as such and tax deducted at source from it.


I would ask for further clarity on your payslip. Revenue make it clear that the subsidy amount (untaxed, until the end of the year reconciliation) and regular pay/top-up (taxed) should be shown separately.

Until last week (when more than likely you were moved to "Week 1" basis), there should probably have been a tax refund amount too. Again, this MUST be shown as such.

Burlap_Sack

shatners bassoon wrote: »

Sounds like your employer is taking your net pay and working back from there, adjusting the top-up to the subsidy until they get the right net figure.

Two issues here - you're not paying tax on the subsidy portion which will be payable at the end of the year and also, you may well be getting a PAYE refund which isn't being passed on to you.

So in effect my salary is being reduced as I will have to pay taxes out of my net wages? Is this how my employer should be dealing with this?

Noel-z

collsoft wrote: »

Hi Noel-z,

It is a requirement from Revenue that the wage subsidy is clearly shown on your payslip, and the suggested description is "GovC19 WageSub". Speciffically the guide says that

Thanks so much for the reply. That section is there for sure. It's spread out over 2 employers so he has 170.47 marked on each payslip as GovC19 WageSub.

The issue is he's not entering the full amount that is being topped up. what he's entering in the gross pay section isn't enough to add up to the correct NEt pay.

Initially my employer wasn't topping up to full amount but after I called the, on it they agreed to top up completely. The accountant never changed the payslips to reflect this going forward.

So if him increasing the gross but seeing a decrease in the subsidy, he's obviously doing something wrong?

If so, is it possible to retroactively amend this in Sage?

Noel-z

Seve OB wrote: »

Noel. As Collsoft has pointed out you employer is wrong. He is knowingly false accounting by the sounds of it. Unless they are genuine expenses which would need to be vouched (which I doubt unless he is producing false receipts) then he could find himself in very hot water.
It is not your concern how he runs his business but your pay is your concern. Make sure he does it correctly as it clearly affects you going for loans etc. If he refuses and if it was me, I’d tell him he has to or you will be forced to make an official complaint with the WRC, which I’m sure your rather not have to do.
Oh and document everything, writing or email if you can.

This is all the accountant from what I can tell. He strikes me as a little bit careless. There are no expenses involved. Just basic pay.

Should be fairly simple to reflect the 100% top up? Bear in mind that my subsidy is spread over 2 employers. Him being the accountant for both. In case that matters at all.

Thanks so much

Noel-z

Is it possible for the accountant to fix these in incorrect payslips in sage?

Seve OB

Noel-z wrote: »

Is it possible for the accountant to fix these in incorrect payslips in sage?

Yes It is possible but could be messy as revenue submissions have already been made

Noel-z

Seve OB wrote: »

Yes It is possible but could be messy as revenue submissions have already been made

Thanks Seve, Any idea of the process and how quick it could be rectified?

doc22

Noel-z wrote: »

Thanks Seve, Any idea of the process and how quick it could be rectified?

You'd have to contact revenue and let them know the error and let them advise if it can be corrected rather than them finding out in compliance

Seve OB

doc22 wrote: »

You'd have to contact revenue and let them know the error and let them advise if it can be corrected rather than them finding out in compliance

Would agree this is best. Normally you are allowed to amend a submission, but since COVID revenue asked not to as it just messes everything up. So yea, they should fix it, but they should also contact revenue and tell them of the mistake they made

Noel-z

Seve OB wrote: »

Would agree this is best. Normally you are allowed to amend a submission, but since COVID revenue asked not to as it just messes everything up. So yea, they should fix it, but they should also contact revenue and tell them of the mistake they made

Thanks for the help guys! Awaiting response.

Noel-z

Noel-z wrote: »

Thanks for the help guys! Awaiting response.

So the Response was. We can amend the payslips by showing the top up as expenses. And we can write a letter explaining but cannot use the word Error.

collsoft

Sorry, perhaps I am misunderstanding.

Are you saying that this is what Revenue told you?

Noel-z wrote: »

So the Response was. We can amend the payslips by showing the top up as expenses. And we can write a letter explaining but cannot use the word Error.

doc22

Noel-z wrote: »

So the Response was. We can amend the payslips by showing the top up as expenses. And we can write a letter explaining but cannot use the word Error.

Did you get that in writing :eek:

Seve OB

sounds very odd.
i'd quite happily take my wages as expenses and not have to pay tax

Noel-z

doc22 wrote: »

Did you get that in writing :eek:

I did actually. The bosses aren't based here and all of their knowledge of Irish
taxation etc comes from the accountant who is fairly clueless it seems.

Noel-z

Seve OB wrote: »

sounds very odd.
i'd quite happily take my wages as expenses and not have to pay tax

Haha. Let's hope the bank are ok with it. I have a feeling I'll be going back to them in a week.

capefear

Noel-z wrote: »

So the Response was. We can amend the payslips by showing the top up as expenses. And we can write a letter explaining but cannot use the word Error.

was that response from the revenue or your boss?

snowgal

another question here please.
Like everyone, our employees were receiving tax/usc refunds during the the past few months until Revenue changed to week 1. Obviously these were passed on to employees each week. But I think Revenue have then adjusted our p30 returns in April and May to include these refunds (i.e they have taken back that amount). Now finding it hard to reconcile the p30s each month as theyre higher than what we submitted??
Also, when we receive our twss refund from Revenue would that include this tax/usc amount?
Thanks

jammiedodgers

This was touched on earlier in the thread but wondering can someone go into a bit more detail regarding how this will be taxed at y/e.

For eg. currently an employee could be taking home €580 (€410 subsidy + €170 topup). Most staff are now on a Week 1 basis so won't be paying any tax in real time. Before the pandemic this employee would have been on €680 with deductions bringing it to €580 nett.

So at year end this employee will be taxed on what should already be their Nett figure if I'm reading it right? Is this an issue that needs to be sorted between employer and employee?