COVID-19 Income Support Decision Tree & Sample Wage ... · if income is above tax credits) B1....

COVID-19Income Support

Decision Tree & Sample Wage

Calculations

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COVID-19 INCOME SUPPORT DECISON TREE

B. EMPLOYEE?

A. On Social Welfare Benefits?

A1. At present, Social Welfare benefits will remain the same

C. Self- Employed?

C1. Business ceased or temporarily ceased due to COVID-19?

C2. Apply to DEASP for COVID-19 Unemployment weekly Payment of €350 - not subject to IT/PRSI or USC at this point in time but subject to

review at end of year (will be taxable if income is above tax credits)

B1. Voluntarily left your employment during

COVID-19?

B3. Lost Job or laid off temporarily due to COVID-19 on or after 13/03/20 & not

maintained on payroll

B7. Temporarily laid off, put on short time & kept on ER payroll

B9. Reduced Hours due to COVID-19?

Yes Yes Yes

B2. No entitlement to Covid-19 Unemployment

Payment. Possibly job seekers benefit available if enough PRSI stamps, if not

means tested payment

B4. 1 adult and 1 or more child dependents?

YesNo

B5. Apply to DEASP for COVID-19 Unemployment weekly Payment of €350 - not subject to IT/PRSI or USC at this point in time but subject to review at end of year (so it is taxable if

income is above tax credits etc. - likely collected in future years through reduction of tax credit)

B6. Apply to DEASP for COVID-19 Jobseekers Payment as this will bring weekly payment to in excess of €350.

Taxable in the future depending on income and tax credits.

B8. No action required. Employer will make payment through payroll in the

normal way. See details of subsidy amounts payable under the Employer diagram. Subsidy/Payment not subject to IT/PRSI or USC at this point in time but subject to review at end of year

(so it is taxable if income is above tax credits etc. - likely collected in future years through reduction of tax credit - No PRSI will apply). Note amount

paid to EE in excess of subsidy is fully taxable but no EE PRSI

B10. Apply to DEASP for Short Working Time Payment.

Payment made in respect of regular salary for days no longer working. Depends on

Social Ins Contributions.

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Yes

COVID-19 Income Support Decision TreeDocument Version: 2Version Date: 03/04/2020

Consideration -May be more beneficial to enter into negotiations with your employer for you to be temporarily laid off so that Option B3 applies where net week pay is lower than €500 (could arise where unpaid leave or reduced hours worked in January and February 2020 as these are the base months for calculating

average weekly pay).

Document for education purposes only. No portion of this document shall be deemed professional advice. You should always seek specific professional advice before taking or refraining to take any action in relation to these matters.

Based on interpretation of Revenue guidance at the date listed above.

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D1. Continue in business as usual

D. EMPLOYERS - BUSINESS IMPACTED AS A RESULT OF COVID-19? No

D2. Impact pushing you down route of laying off employees or providing reduced hours?

Yes

D3. Lay off Employees without pay

Yes

D4. Can employee claim redundancy after a certain period where they have been temporarily laid off/put

on short time (where the working hours is <50% of normal weekly working hours)?

D5. No – under the Act, if the lay off is due to COVID-19 then the Redundancy legislation does not

apply - (applies for period up to 31 May 2020)

D6. Keep staff on payroll & apply for COVID-19 Wage Subsidy Scheme *see conditions below (also applies to staff on short time & employees

previously laid off & rehired)

Benefits - Ensures that employees keep a link with the employer - allows for retention of staff - available when CV 19 is over. Employer PRSI on payment >subsidy at 0.5%. No ER PRSI on subsidy element

Risks - Certain aspects of the scheme are based on revenue guidance/concession which are not actually stated in the Act. As this is a concession - in any appeal, the Appeal Commissioner/Courts can only use the Act. If found later not to be applicable, then amount is repayable with interest - https://revenue.ie/en/corporate/communications/documents/guidance-on-employer-eligibility-and-supporting-proofs.pdf

D7. Were the employees on the payroll at 29/02/2020? (this includes Directors as these are assessed to Schedule E) - Payroll submission

for Feb completed before 15/03

Yes

YesNo

D9. Does your business meet the conditions in S.28(2)(3) of the Emergency Services CV Act i.e. is there a

significant reduction in turnover (25%) & an inability to pay Employees salaries after making best efforts (see Revenue Concessions) & is there an intention to keep

the Employees on afterwards?

D8. Subsidy not applicable. Consider laying off employees

- See option D3 – Lay off employees

Rev Concession -a) Where an employer has significant decline in business but has strong cash reserves, still qualifies but revenue expect ER to continue to pay significant portion of remaining wage. b) If 25% test not met but documentary evidence to show it was expected - then should suffice.

YesD10. Has the employer documented the basis for determining how they met the

conditions above?Yes

D11. Has the Employer Self Declared?

D.13. Is the current pay period before 20 April 2020 or such other date as the Revenue determine before then?*

D16. Is the current pay period on or after 20 April 2020 or such other date before then as the Revenue determine?*

Guidance -See Revenue FAQ’s https://revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-

scheme.pdf

D12. Will the employer show the subsidy as non-taxable pay on payslip? Note although not taxable now the employee will pay tax on this in future (year end review).

Yes Yes

D14. – Amount of subsidy based on the net weekly average wage* from 01/01/20 to 29/02/20 (but initially not based on income but see clawback at D15). See sample calcs Appendix 1, 2 & 3

D17. Amount of subsidy based on the net weekly average wage from 01/01/20 to 29/02/20 and the net income of each EE*

*See sample calcs for average net weekly average wage at 1, 2 & 3

D15. Subsidy up to a max of €410 net weekly take home pay per employee inc. directors who on payroll at 29 February 2020 and payroll submission made to revenue between 01/02/20 an 15/03/20 with pay dates between 01/01/20 and

29/02/20. Revenue will pay €410 for all employees put on PRSI class J9 – but if calculations for the wage subsidy provide a lower figure as detailed in Box D18, D19 or D20 as applicable. The difference is refundable to revenue through either cash payment or reduction in future subsidy. Where the payroll run relates to monthly payroll for March 2020 then see

special rule for calculation of the actual subsidy for that month at 4 in the following pages.

D18. Where EE (inc. directors) net weekly take home pay/emoluments is

<=€586 then subsidy = 70% of this amount subject to Max

€410 net pw *see calcs 1A, 2A & 3A

Appendix 1, 2 & 3

D19. Where EE (inc. directors) net weekly

take home pay/emoluments is >€586

but <=€960 then subsidy = €350 pw

*see calcs 1B, 2B & 3BAppendix 1, 2 & 3

D20. Where EE (inc. directors) net weekly take home

pay/emoluments is >€960 then subsidy

= €Nil *see calcs 1C, 2C

& 3CAppendix 1, 2 & 3

Subsidy element - Not subject to USC/IT/PRSI or ER PRSI (but is subject to year end review). Payment in excess of subsidy subject to tax in normal way but ER PRSI at

0.5%

Option 1

Yes

Yes

Option 2

* calculated based on net weekly pay in January and February 2020

This assumes the payroll submission was completed or on or after

26/03/20 and payment made after that date. If the payroll submission

was completed before 26/03/20 even if payment is not made until after 26/03/20; or on or after 26/03/20

but paid prior to 26/03/20 then the Wage subsidy scheme is not

applicable. Consider if the employer refund scheme applies such that €203

is payable per employee per week (subject to the other conditions of the scheme applying e.g. cannot pay more

than €203 to that employee in that period Subsidy element - Not subject

to USC/IT/PRSI or ER PRSI (but is subject to year end review). Payment in excess of subsidy subject to tax in

normal way but ER PRSI at 0.5%

*there is no age restriction here




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EXAMPLES OF WAGE SUBSIDY CALCULATION


1. Examples of Wage Subsidy - Weekly Paid Employees

* our interpretation here as S.28 refers to 2018 regulations where Gross Pay is defined as including theseXXX X =(A/B)

€ (A)

Net average weekly pay for purposes of subsidy calculation (C)

No. of insurable weeks - capped at 9 weeks (B)Total Net Pay for Jan & Feb (i.e. Gross pay Jan &

Feb on payroll submissions inc. BIK but before pension deduction * less PAYE Paid, less EE PRSI Paid and less USC Paid (See FAQ 4.4))

1A i) Person on <=€586 - Weekly - As determined

If in the current pay period, full tax credits were not utilised, then it is likely that a tax refund will also be paid when done on a cumulative basis. This tax refund is payable on top of the max ANWPIn this case, Net pay for the employee will be less than what it was in Jan & Feb as tax is applied to the additional top up amount, if applicable (assuming tax credits, do not cover it).

Assume Average Net weekly pay (as per 1 abc)70% of ANWP - Subsidy amountMax additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 586€ 410

€ 176

1A ii) Person on <=€586 - Weekly

If in the current pay period, full tax credits were not utilised, then it is likely that a tax refund will also be paid when done on a cumulative basis. This tax refund is payable on top of the max ANWP.In this case, Net pay for the employee will be less than what it was in Jan & Feb as tax is applied to the additional top up amount, if applicable (assuming tax credits, do not cover it).

Assume Average Net weekly pay 70% of ANWP - Subsidy amountMax additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 400€ 280

€ 120

Note for employees on short time/reduced hours here it Is important that they do not get more that net pay hence subsidy amount may need to be reduced to they are not paid more than net pay.




Appendix 1

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1B i) Person on >€586 but <=€960 - Weekly

If in the current pay period, full tax credits were not utilised, then it is likely that a tax refund will also be paid when done on a cumulative basis. This tax refund is payable on top of the max ANWP.In this case, Net pay for the employee will be less than what it was in Jan & Feb as tax is applied to the additional top up amount, if applicable (assuming tax credits, do not cover it).

Assume Average Net weekly pay 70% of ANWP Maxed out at €350Subsidy amountMax additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 700€ 539

€ 350

€ 420

1B ii) Person on >€586 but <=€960 - Weekly

If in the current pay period, full tax credits were not utilised, then it is likely that a tax refund will also be paid when done on a cumulative basis. This tax refund is payable on top of the max ANWP.

Assume Average Net weekly pay 70% of ANWP Maxed out at €350Subsidy amountMax additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)Assume - Employer regrossed the €420 up to €600 (assume the regross of €420 is €600 for purposes of example) such that the net pay in the employees hand was €420 - Amount of subsidy reduced by €180 (€600-€420) such that subsidy payment is:Total pay in this case in employees hand:Total cost to employer after subsidy ignoring ER PRSI:

€ 700€ 539

€ 350

€ 420

€ 170€ 770€ 780

1C) Person on >€960 - Weekly

Cost to employer - Same as previously as paying gross pay - no subsidy unless wage reduction (even with wage reduction - no access to scheme as based on Jan-Feb 2020)

Assume Average Net weekly pay Subsidy amount

€ 960€ Nil




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Examples of Wage Subsidy - Monthly - For April

* our interpretation here as S.28 refers to 2018 regulations where Gross Pay is defined as including these

Monthly (total value of net pay - Jan (A)2)

Total Net Pay (i.e. Gross pay on payroll submissions inc. BIK but before pension deduction* less PAYE Paid, less EE PRSI Paid and less USC Paid)

Insert amount per payroll records/submissions

Monthly (total value of net pay - Feb (B)

Insert amount per payroll records/submissions

Total (C)

= (A+B)

No. of insurable weeks - capped at 9 - (D)

9

Net average weekly pay

=(C/D)

2A i) Monthly EE where Net average Weekly pay is <=€586 as calculated in (2) above

If in the current pay period, full tax credits were not utilised, then it is likely that a tax refund will also be paid when done on a cumulative basis. This tax refund is payable on top of the max ANWP. In this case, Net pay for the employee will be less than what it was in Jan & Feb as tax is applied to the additional top up amount, if applicable (assuming tax credits, do not cover it).

(A) Average Net weekly pay as calculated at 2) above (FAQ 4.3) (B) No. of weeks in year when determining monthly salary for purposes of subsidy (FAQ 4.7) (C) No. of months in year when determining monthly salary for purposes of subsidy (FAQ 4.7) (D) Non-taxable element for purposes of subsidy calculation (A*B)/C) Maximum subsidy of €1,777 or 70% of D) above whichever is lesser - where ANW as calc in 2) is <=€586 (E) 70% of (D) - Subsidy amount Maximum subsidy lower of €1,777 of 70% of D) above i.e. ESubsidy in this case = Max additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 586

€ 52

€ 12

€ 2,539

€ 1,777

€ 1,777

€ 762

2A ii) Monthly EE where Net average Weekly pay is <=€586 as calculated in (2) above


(A) Average Net weekly pay as calculated at 2) above (FAQ 4.3)(B) No. of weeks in year when determining monthly salary for purposes of subsidy (FAQ 4.7) (C) No. of months in year when determining monthly salary for purposes of subsidy (FAQ 4.7) (D) Non-taxable element for purposes of subsidy calculation (A*B)/C) Maximum subsidy of €1,777 or 70% of D) above whichever is lesser - where ANW as calc in 2) is <=€586 (E) 70% of (D) Maximum subsidy lower of €1,777 of 70% of D) above (i.e. (E)) Subsidy in this case = Max additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 400

€ 52

€ 12

€ 1,733

€ 1,213

€ 1,213

€ 520



Appendix 2

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2B i) Monthly EE where Net average Weekly pay is >€586 but <=€960 as calculated in (2) above


(A) Average Net weekly pay as calculated at 2) above (FAQ 4.3)(B) No. of weeks in year when determining monthly salary for purposes of subsidy (FAQ 4.7) (C) No. of months in year when determining monthly salary for purposes of subsidy (FAQ 4.7) (D) Non-taxable element for purposes of subsidy calculation (A*B)/C) Maximum subsidy of €1,517 or 70% of D) above whichever is lesser - where ANW as calc in 2) is >€586 but <=€960(E) 70% of (D) Maximum subsidy lower of €1,777 of 70% of D) above (i.e. (E)) Subsidy in this case = Max additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 770

€ 52

€ 12

€ 3,337

€ 2,336

€ 1,517

€ 1,820

2B ii) Monthly EE where Net average Weekly pay is >€586 but <=€960 as calculated in (2) above


(A) Average Net weekly pay as calculated at 2) above (FAQ 4.3)(B) No. of weeks in year when determining monthly salary for purposes of subsidy (FAQ 4.7) (C) No. of months in year when determining monthly salary for purposes of subsidy (FAQ 4.7) (D) Non-taxable element for purposes of subsidy calculation (A*B)/C) Maximum subsidy of €1,517 or 70% of D) above whichever is lesser - where ANW as calc in 2) is >€586 but <=€960(E) 70% of (D) Maximum subsidy lower of €1,517 of 70% of D) above (i.e. (E)) Subsidy in this case maxed at €1,517= Max additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%) Assume - Employer regrossed the €1,820 up to €2,300 such that the net pay in the employees hand was €1,820 - Amount of subsidy reduced by €480 (€2,300-€1,820) such that subsidy payment is now reduced to:Total pay in this case in employees hand: Total cost to employer after subsidy ignoring ER PRSI:

€ 770

€ 52

€ 12

€ 3,337

€ 2,336

€ 1,517

€ 1,820

€ 1,340 € 3,337

€ 2,477





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2C) Monthly EE where Net average Weekly pay is >€960 as calculated in (2) above


Person on >€960 - Weekly Subsidy amount € Nil



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Examples of Wage Subsidy - Fortnightly paid Employees

* our interpretation here as S.28 refers to 2018 regulations where Gross Pay is defined as including these€ XXX X =(A/B)

€ (A)


No. of insurable weeks - capped at 9 weeks (B)3)

Total Net Pay for Jan & Feb (i.e. Gross pay Jan & Feb on payroll submissions inc. BIK but before pension deduction * less PAYE Paid, less EE PRSI Paid and less USC Paid (See FAQ 4.4))

3A i) Fortnightly EE where Net average Weekly pay is <=€586 as calculated in (3) above

If in the current pay period, full tax credits were not utilised, then it is likely that a tax refund will also be paid when done on a cumulative basis. This tax refund is payable on top of the max ANWP In this case, Net pay for the employee will be less than what it was in Jan & Feb as tax is applied to the additional top up amount, if applicable (assuming tax credits, do not cover it).

Assume Average Net weekly pay as calc at 3 aboveNo. of weeks in payroll runTotal average net weekly pay70% of ANWP - Subsidy amountMax additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 586 € 2 € 1,172€ 820

€352

3A ii) Fortnightly EE where Net average Weekly pay is <=€586 as calculated in (3) above


Assume Average Net weekly pay No. of weeks in payroll runTotal average net weekly pay(A) 70% of ANWP - Maximum subsidy of €820 or 70% of A) above whichever is lesser - where ANW as calc in 1) is <=€586Subsidy in this =Max additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 400 € 2 € 800€ 560

€ 560

€240




Appendix 3

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3B i) Fortnightly EE where Net average Weekly pay is >€586 but <=€960 - Weekly


Assume Average Net weekly pay as calc at 3 aboveNo. of weeks in payroll runTotal average net weekly pay70% of ANWP Maxed out at €700 Subsidy amount Max additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 770 € 2 € 1,540€ 1,078

€ 700

€840

3B ii) Fortnightly EE where Net average Weekly pay is >€586 but <=€960 - Weekly

If in the current pay period, full tax credits were not utilised, then it is likely that a tax refund will also be paid when done on a cumulative basis. This tax refund is payable on top of the max ANWP.

Assume Average Net weekly pay as calc at 3 aboveNo. of weeks in payroll runTotal average net weekly pay70% of ANWP Maxed out at €700 Subsidy amount Max additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%) Assume - Employer regrossed the €840 up to €1,100 (assume for purposes of example this is the regrossed amount) such that the net pay in the employees hand was €840 - Amount of subsidy reduced by €260 (€1,100-€840) such that subsidy payment is:Total pay in this case in employees hand:Total cost to employer after subsidy ignoring ER PRSI:

€ 770 € 2 € 1,540€ 1,078

€ 700

€840

€440€770

€1,360

3C) Fortnightly EE where Net average Weekly pay is >€960 - Weekly


Assume Average Net weekly pay Subsidy amount

€ 960€ Nil



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4A) Monthly EE for all Net average Weekly pay levels as calculated in (4) above


(A) Average Net weekly pay as calculated at 4) above (FAQ 4.3)(B) No. of payroll weeks in month (assuming four weeks in monthly payroll) (C) Non-taxable element for purposes of subsidy calculation (A*B)/C)Maximum subsidy of €812 or 70% of (C) above whichever is lesser - where ANW as calc in 4) is <=€586(D) 70% of (C) Maximum subsidy lower of €812 of 70% of C) above i.e. D Subsidy in this case maxed at =Max additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 586

€ 4

€2,344

€ 1,641

€ 812

€1,532

Examples of Wage Subsidy - Monthly - for March


€ (A)


No. of insurable weeks - capped at 9 weeks (B)4





Appendix 4

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4A) Monthly EE for all Net average Weekly pay levels as calculated in (4) above


(A) Average Net weekly pay as calculated at 4) above (FAQ 4.3)(B) No. of payroll weeks in month (assuming four weeks in monthly payroll) (C) Non-taxable element for purposes of subsidy calculation (A*B)/C)Maximum subsidy of €812 or 70% of (C) above whichever is lesser - where ANW as calc in 4) is <=€586(D) 70% of (C) Maximum subsidy lower of €812 of 70% of C) above i.e. D Subsidy in this case maxed at =Max additional top up amount permitted before subsidy is reduced on a euro for euro basis - Income tax & USC applied to this payment (ER PRSI @ 0.5%)

€ 586

€ 4

€2,344

€ 1,641

€ 812

€1,532

Examples of Wage Subsidy - Monthly - for March


€ (A)


No. of insurable weeks - capped at 9 weeks (B)4




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