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08 Jun, 2020

Week One Basis, could it help employees avoid Potential Covid-19 tax?

More than 347,094 employees have received at least one payment under the COVID-19 Temporary Wage Subsidy Scheme. Did you know employees can reduce or avoid a retrospective tax bill at the end of the year by contacting the tax office now?

Like any income or benefit the Wage Subsidy payment is taxable, however Income Tax and the Universal Social Charge are not deducted in real time. Instead, the subsidy payment will most likely be liable to Income Tax and USC on review at the end of the year.

Employees can reduce or avoid a retrospective tax bill at the end of the year by contacting the tax office now and asking for their tax credits to be applied on a weekly or monthly basis.

Also known as the ‘non-cumulative basis’, the Week One Basis calculated on a employee’s Income Tax and USC week-to-week. The employer treats each payroll submission as a standalone event and the employee receives the tax credits for that particular period only.

This contrasts with the usual system where PAYE and USC are calculated on a cumulative basis from 1 January each year to the date on which the payment is being made and any unused tax credits can be carried forward to the next pay period.

Activating Week 1 Basis Request

  • 1 - Visit Revenue Website - www.ros.ie

  • 2 - Select “My Account”

  • 3 - Sign in

  • 4- Select “My Enquiries”

  • 5 - Fill in the required fields as below and under “enquiry details” add a message requesting week 1 basis

    * Tax Ref Type - CUST

    * Enquiry relates to - PAYE employee - Credits

    * More specifically - PAYE Services query

For further information and/or advice, contact ifac’s payroll team at payroll@ifac.ie

To read our full Agri Outlook 2020 click here