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📈Business > 💚12 Insurance and Tax > Flashcards

💚12 Insurance and Tax Flashcards

1
Q

What is INSURANCE

A

Insurance offers financial protection from risks.
You pay a small premium each year and recieve compensation if you make a claim

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2
Q

NAME the 5 principles of insurance

A

1-Utmost good faith
2-Insurable Interest
3-Indemnity
4-Contribution
5-Subrogation

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3
Q

What is an Insurance Premium

A

The amount of money that a business/household pays to the insurance company each year for its insurance cover.
Depends on 5 factors

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4
Q

What are the five factors an insurance premium depends on

A

Risk
Value of the item
Claims
Profit
Government Tax

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5
Q

Name 7 types of insurance a busines sshould have

A

1.Fidelity Guarantee Insurance
2.Public Liability Insurance
3.Product Liability Insurance
4.Employers Liability Insurance
5.Motor Insurance
6.Theft Insurance
7.Plate Glass Insurance

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6
Q

What does 1.Utmost Good Faith mean

A

Party seeking insurance must disclose all material information to the insurer. If not the contract is null and void

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7
Q

What is Material Information

A

Any information that would affect the insurance company’s decision whether to insure the party and if so what premium to charge it

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8
Q

Whats an insurance claim form

A

Form filled by the insured person when seeking compensation
Sets out details of asset,damage, how damage happened, amnt of compensation etc
Insurance company uses it to make a decision

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9
Q

Whats an insurance proposal form

A

Application form that a person fills in when she wants to get something insured. Asks lots of Qs.
Insurance company uses it to decide

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10
Q

Whats an insurance policy

A

Document u get from ins company
Legal contract
Sets out what risks are covered/not covered.
Tells u ur premium

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11
Q

Whats Over-Insurance

A

When u insure an item for more than its actually worth

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12
Q

What is under insurance

A

When u insure an item for less than its acc worth

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13
Q

What is the average clause

A

Rule for under insurance that states that bcuz u are only insured for a fraction of what the items worth..
u only receive that same fraction of any compensation

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14
Q

What does 2.Insurable Interest mean

A

U can only insure something u own
U must derive benefit from it and lose money if anything bad happens to it
Legal relationship
(U cant insure empire state building)

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15
Q

What does Insurance Policy 3.Indemnity mean

A

U cant make a profit from an ins claim. No point over insuring

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16
Q

What does 4.Contribution mean

A

If u insure an asset with a no.of companies, u wont recieve X times the compensation
Each company will pay u a fraction in the ratio of the amount u were insured with each

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17
Q

What does 5.Subrogation mean?

A

Once the ins company’s given u full compensation the company now owns it. U lose ur rights go make further claims on the item

U cant sell the wreck
Or sue the person that caused the damage

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18
Q

What is a loading

A

Extra charge added to the basic premium to cover higher risks

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19
Q

Explain the factor 1.Risk that affects an insurance premium

A

Higher risk=Higher premium+Loading
Inexperiemced drivers, smokers, living in a bad area

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20
Q

Explain the factor 2.Value Of Item that affects an insurance premium

A

More valuable=Higher premium
Eg. More expensive necklace has higher premium

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21
Q

Explain the factor 3.Claims that affects an insurance premium

A

The more an Ins Company pays out in claims, the higher premium theyll charge

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22
Q

Explain the factor 4.Profit that affects an insurance premium

A

Ins Company charges a premium thatll give it a decent profit

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23
Q

Explain the factor 5.Govt Tax that affects an insurance premium

A

Government adds Tax to premium charged by company, thus increasing cost for consumer

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24
Q

Explain the 1.Fidelity Guarantee Insurance a business should have

A

Protects against financial loses a business may suffer as a result of fraudulent/dishonest acts committed by an employee

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25
Q

Explain the 2Public Liability Insurance a business should have

A

Protects business if member of public is injured or his property damaged due Business’s negligence whiles hes on a business,s premises
Compensation paid to mem of public

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26
Q

Explain the 3.Product Liability Insurance a business should have

A

protects a business that manufactures or sells products to a customer that injuries him
insurance company pays to customer, E.g defects, design, flaws, defective, warnings, or instructions

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27
Q

Explain the 4.Employers Liability Insurance a business should have

A

protects if employee makes a claim against ennis because he was injured or made ill at work through fault of his employer
ins company pays to employee

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28
Q

Explain the 5.Motor Insurance a business should have

A

under Irish law, vehicles must be insured protects if one causes, damage or injury,

third-party
comprehensive,
third-party fire and theft 

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29
Q

Explain the 6.Theft Insurance a business should have

A

Pays business compensation for value of any stolen stock or items from business

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30
Q

Explain the7. Plate Glass Insurance a business should have

A

businesses windows are damaged insurance company pays to get them fixed or replaced

31
Q

Whag are the 3 things insurance is important for for a business

A

Business Survival-Wont be ended by a catastrophe,ins company gives money to rebuild etc

Risk Management- Transfer risks to ins company

Improved Cash flow-Easier to pay yearly small amounta

32
Q

Name 5 types of Insurance a household should have

A

1.Health Insurance
2.Life Assurance
3.House+Contents Insurance
4.Motor Insurance
5.Mortgage Protection Insurance

33
Q

What is 1.Health Insurance that a household should have

A

Pays private medical bills of a family member if they become sick

34
Q

What is 2.Life Assurance that a household should have

A

Protects ppl financially dependent on insured person. Pays the partner if insured person dies (Child, civil partner, spouse)
-Whole life policy
-Endowment Policy

35
Q

What is 3.House+Contents Insurance that a household should have

A

protects home and its contents if
destroyed, damaged or stolen

36
Q

What is 4.Motor Insurance that a household should have

A

compulsory by law will pay for damage or injury caused by the family’s car,

third-party,
comprehensive,
third-party fire and theft

37
Q

What is 5. Mortgage Protection Insurance that a household should have

A

if a family can’t pay mortgage due to illness, redundancy or death, the insurance company will cover it

38
Q

What are the similarities in Business and Household insurance

A

compulsory motor insurance,
fill-in proposal form and obey, utmost good faith.
Make a claim via claim form.

39
Q

What are the differences in Business and Household insurance

A

businesses face more risks so have more insurance policies.
Businesses are more valuable so have higher premiums.

40
Q

What is Third Party Motor Insurance

A

Pays, only for a damaged/injury cause to another party

41
Q

What is Third Party Fire and Theft Motor Insurance

A

pays for damage/injury caused to another party and, if vehicle is stolen or burned out

42
Q

what is comprehensive motor insurance?

A

It covers all risks included in third-party and third-party fire and theft and includes damaged caused to owners car

43
Q

define taxation

A

Taxation is the money that all businesses and households must pay to the government

Govt uses it to pay for services etc.

Minister for finance decides all taxes

44
Q

What are the reasons for taxation??!!?! (3)

A

To Raise Money
-pay for govt services

To Redistribute Wealth
-Take money from rich, guve to poor
-Progressive taxes

To Discourage Consumption
-Higer tax on fags and alcohol
-Thats a regressive tax ^ 😢

45
Q

What is a progressive tax

A

Higher percent tax rate for ppl on higher wages
Income tax!

46
Q

Whats a regressive tax?!

A

The tax affects people on lower incomes more than those on higher incomes

E.g The 8€tax on fags is a much larger % of a minimum wage person than a doctor

47
Q

Name the 6 taxes paid by households

A

1.Wages- PAYE PRSI USC
2.VAT
3.Capital Gains Tax (CGT)
4.Capital Acquisitions Tax (CAT)
5. Deposit interest retention tax (DIRT)
6.Motor Tax

48
Q

What is PAYE

A

Pay As You Earn
Employee pays income tax on her wages
Employer calculates it and sends to revenue

49
Q

What are Tax Credits

A

Amounts that all income taxpayers can deduct from their gross income tax bill.

Theyre used to reduce their income tax payable

Theyre not refundable (if ur tax credits are 3k but u only have 2k in tax u dont get the extra K)

Diff ppl qualify for diff tax credits (Blind, carers,)

50
Q

WHAT IS PRSI

A

Pay Related Social Insurance
Tax taken out of wages by employer and paid to revenue

Pay it so u can qualify for welfare benefits in future such as dental optical and medical benefits

51
Q

WHAT IS USC

A

Universal Social Charge
Tax payable on ALL income, not just wages x.

Was introduced in 2011 as a way for govt to generate extra money

Employers deduct the usc percentage and send to revenue

Progressive Tax!!

52
Q

Name the forms used in PAYE tax

A

P45-When leaving job
P60-End of every tax yr
P21-Revenue giv to employee at end of tax year
Form 12A-Start work for very first time

53
Q

What is the P45 form used in PAYE tax

A

Form employer gives to employee when leaving job.

Contains Gross Pay and PAYE,USC,PRSI that was deducted from the start of the year til present

Employee uses it to claim social welfare benefits (sign up for dole) or to give to new employer to make sure taxes r worked out properly

54
Q

What is the P60 form used for in PAYE tax

A

Employer gives to employee at end of tax year

Contains Gross Pay and PRSI USC PAYE deducted in that year

Employee can use to claim tax refund from Revenue and as evidence that hes paid enough PRSI to claim benefits

55
Q

What is P21 form used in PAYE TAX

A

Revenue gives to employee at end pf tax yr

Shows difference between how much tax he paid and how much was actually owed

If he overpaid tax he gets refund
Of he underpaid tax he must send revenue a cheque

This form is called a Balancing Statement for that reason

56
Q

What is the FORM 12A for PAYE tax

A

Form all employees must fill in when working for very first time

Needs to be done so revenue can work out tax credits and rate of tax u shud be paying

Of u dont u get charged emergency tax until u fill in the form

57
Q

What is VAT

A

Tax that households paay when they buy products and services from a business
Shopkeeper adds the vat to the price then
VAT not charged on everything , education, funerals, medicine, childrens clothes are not liable to VAT

This makes these essential products more affordable

58
Q

What si CAPITAL GAINS TAX

A

Tax that households have to pay on the profit they make when they sell one of their assets

Percentage of the profit, u have to work it out urself and pay it by a certain deadline

if u dont ur liable to interest and penalties

small amount of profits made each yr os tax free, this is called the annual exemption

59
Q

What is CAT

A

Capital Acquisitions Tax
Tax u pay on the value of a gift or inheritance youve recieved

U can recieve a certain amount of gifts and inheritances tax free

Married couples, civil partnership dont pay any CAT

U can receive large amnts tax free from ur parents but once uve exceeded this limit all future ones are liable to tax

Smaller exemption limits apply tl grandparents,uncles,aunts,brothers and sisters

U have to work it out urself and pay to revenue by a certain deadline, if not.. interest and penalties

60
Q

What is DIRT

A

Deposit Interest Retention Tax
Household pays on interest it earns on savings in bank or credit union

Bank/CU deducts it and pays it straight to revenue for u

61
Q

What is MOTOR TAX

A

Tax imposed on motor vehicles
Pay to local council each year
Amount determined by cars C02 emission levels
All households must display current tax disc on windscreen of car as evidence

62
Q

Name the taxes paid by husinesses (6)

A

1.Self Assessment Income Tax
2.Corporation Tax
3.VAT
4.Commercial Rates
5.Customs Duties
6.Employers PRSI
7.Motor Insurance

63
Q

What is the business tax 1.Self-Assesment Income tax

A

Income tax that self employed entrepreneurs pay on their profits (sole traders and partners in a partnership)

Have to work out themselves and pay by 31 Oct of that year
They also have to send in annual tax return detailing income and tax credits

If pay taxes and submit tax returns online using ROS this 31 Oct deadline is extended to mid november

Subject to revenue audits
Any fraud theure fined and imprisioned

64
Q

Define TAX EVASUON

A

when taxpayers fail to pay the correct amount of tax by not declaring full amnt of income or by claiming tax deductions theyre not entitled to

Illegal and govt has heavy penalties for guilty ppl

65
Q

Define TAX AVOIDANCE

A

When taxpayers take advantage of rules contained in tax law to reduce the amnt of tax they owe.
E.g high income earners can reduce their tax bill by investing in certain Irish films and businesses
LEGAL

66
Q

What is the business tax 2.Corporation TAX

A

Tax that companies pay on their annual profits
Irelands rate v low,attracts foreign companies

Companies work it out themselves,send to Revenue, along with annual tax return detailing income and tax reductions

Subject to revemue audits

67
Q

What is the business tax 3.VAT

A

Value Added Tax
Tax businesses must add on to price of goods and services they sell
They collect from consumer and send VAT straight to Revenue

When a business buys goods it has to pay VAT to their supplier but it will be refunded

68
Q

What is the Business Tax 4.Commercial Rates

A

Tax businesses must pay to their local council every year
Amnt paid is based on value of businesses properties and value depends on location, size and nature of business

Money raised from this tax is used to finance the councils local activities (roads lights etc)

69
Q

What is business tax 5.Customs Duties

A

When business imports from non-EU country it pays tax on the value of the imports.
Can be over 100%!!
Goods wont ve released from customs til the tax is paid

70
Q

What is business tax 6.Employers PRSI

A

Business pays this to revenue if it has employees
Amount payable is equal to percentage of employees gross wages
Money is NOT taken from the employee, the entrepreneur has to pay it out of his own profits

71
Q

What is business tax 7.Motor Tax

A

Every business that has a car has to pay motor tax to local council yearly
Based on cars C02 emissions.
Disc displayed on windshield as proof

72
Q

Effects of Taxation on Businesses

A

1.Lower Profits
-Taxes taken from businesses profits
reduce money leftover for expanding
business

2.Lower Sales
-VAT makes products more expensive,
lowering sales

3.Higher Costs
-Hire accountant to do the taxes,
employers PRSI is then also higher

4.Less Overtime
-High taxes on income discourage
employees to work overtime as govt
takes over 50% of wages
-Business is then short workers in busy
times

73
Q

What are the similarities between household and business TAX

A

Register w revenue when first start and fill in a form

Calculate tax owed and pay on time, if u dont u have interest and penalties

Tax avoidance- Can minimise amount of tax you pay LEGALLY

Must keep proper tax records for at least 6 years. If claiming tax credits/deductions must have proof of elegibility

74
Q

What are the differences between household and business TAX

A

Businesses get more tax reductions than households (claim tax deduct on cost of buying fixed assets)

Business gets VAT refunded from revenue

Businesses collect taxes from others on behalf of revenue (PAYE USC PRSI)

Businesses pay more taxes

📈Business (15 decks)

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