Chapter 12 - Taxation

Question 1

Who is responsible for collecting taxes

Answer 1

The office of the revenue commissioner

Question 2

What is VAT

Answer 2

A percentage tax added to the price of certain goods and services
Current rate is 23% on most good and services
13.5% on items like coal heating electricity
Tourism is 9%
0% on children clothes and shoes

Question 3

What is corporation tax

Answer 3

Tax paid on the profits earned by companies in Ireland
Current rate is 12.5%
Low corporation tax provides financial incentive for business to set up in Ireland

Question 4

What is capital gains tax

Answer 4

Paid on profits earned from the sales or disposal of asserts such as a building

Question 5

What is custom duties tax

Answer 5

Taxes levied on imports coming into Ireland from outside the EU

Question 6

What are commercial rates

Answer 6

Taxes levied by local authorities on property used for commercial purposes to help finance government services

Question 7

Employers PRSI

Answer 7

Levied on firms for every person they employee

Calculated as a % of the employees gross income . Funds social welfare payments and maternity benefits

Question 8

What is PAYE

Answer 8

Income tax paid by employees on their wages

Businesses deduct PAYE before their employees are paid

Question 9

What is USC

Answer 9

Tax payable on gross income
Introduced in 2011
0.5% 2% 4.5% 8%

Question 10

What are excess duties

Answer 10

Taxes added to the price of certain goods such as cigarettes alcohol and petrol

Question 11

What is motar tax

Answer 11

Tax paid annually on vehicles
Determined by the vehicles CO2 emissions
Paid to local county council

Question 12

What is a tax audit

Answer 12

Detailed examination of the revenue commissioner of a taxpayers financial records

Question 13

What is self assessment income tax

Answer 13

Paid by self employed people on their income

They must calculate their own tax liability

Question 14

What is capital acquisitions tax

Answer 14

Paid by those receiving money or assets as a gift or inheritance 33% after 280,000

Question 15

What is DIRT

Answer 15

Automatically deducted from interest received from bank and building society accounts and passed directly from banks to the revenue commissioner

Question 16

What is tax evasion

Answer 16

Where taxpayers illegally evade paying the full amount of tax owed
By not declaring the full amount of their income or by claiming tax deductions they are not entitled to

Question 17

What is tax avoidance

Answer 17

When tax payers take advantage of the tax system to legally reduce the amount of tax that the owe
E.g making payments into a pension fund

Question 18

What are the two rates of PAYE

Answer 18

1) STANDARD RATE OF TAX : on all earnings below a certain amount is called a standard rate cut of post
2) HIGHER RATE OF TAX : applies on all income above the standard rate cut of point

Question 19

What are tax credits

Answer 19

Allowance from the government that reduces the amount of tax owed
E.g single person tax credit , married tax credit
Reduces the amount of PAYE an employees pays

Question 20

What is a form P12A

Answer 20

Used by the revenue to calculate the rate of tax and tax credits that the employee will be entitled too
Filled in when employee first starts working

Question 21

What is a notice of ax credits

Answer 21

Document setting out the tax credits to which a tax payer is entitled to and the standard rate cut of point that will apply

Question 22

What is a p60 form

Answer 22

Shows the amount of pay, income tax , PRSI and USC paid by an employee for the tax year

Question 23

What is a P21 balancing statement

Answer 23

Completed if employees think that they have paid too much tax during the year
Form sent to the RC seeking a rebate of the tax overpaid

Question 24

What is a form P45

Answer 24

Given by all employee to staff when they leave the job
It shows their income tax PRSI and USC paid in the last year
Form needed by next employer to calculate the correct amount of tax to deduct