Finance Chapter 8 - Paper 1 Flashcards
What are deductions?
Money subtracted from gross salary
What is gross salary?
The total salary that an employee earns before any deductions are made.
What is net salary?
Salary earned after deductions, including tax, have been subtracted from the gross salary.
What is personal income tax?
Tax paid by individuals on income earned.
What are taxable deductions?
Those deductions that are subtracted from salary, but they are not subtracted before calculating the tax owed.
What is taxable income?
The portion of salary that tax is calculated on.
What are tax deductible expenses?
Expenses that are subtracted from gross salary before tax is calculated.
What is a pension?
A fund of money from which regular payments will be made during retirement.
What is a medical aid?
A fund to which members contribute regularly and use for medical expenses according to certain rules.
What is credit?
An additional income tax allowance.
What is a deduction table?
A table provided by SARS that shows the amount of tax to be deducted for different salary amounts.
What is an income tax bracket formulae?
Tax formulae based on an annual taxable income only, used to determine the tax values in the deduction table.
What is net salary?
Salary earned after deductions, including tax, have been subtracted from the gross salary.
What is a tax rebate?
An amount of money that is deducted after the annual tax is calculated and paid back to the person who was taxed.
What is a tax threshold?
The minimum salary that a person must earn before tax is charged.
