Insurance and Tax Flashcards
Principles of insurance
Utmost good faith - proposal form, truthfully, material information
Insurable interest - insure something you own
Indemnity - Cannot make a profit, no point in over-insuring, average clause
Contribution - multiple insurance companies
Subrogation - full compensation is all you can get - give up rights to further claims
Average clause formula
Claim x Amount insured with this insurance company
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How much the item is worth
Contribution formula
Claim x Amount insured with this insurance company
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Total amount insured with all insurance companies
Insurance premium factors
Risk Value of the item Claims - more-higher Profit Government tax - 2% stamp duty
Importance of insurance for a business
Business survival
Risk management - safety measures
Improved cash flow - easier future planning
Risk managers tasks
Identify the risks
Calculate costs
Reduce risks - inspections, Health and Safety representitives, security alarms
Insure
Insurance a business should have
Theft insurance - stock
Public liability insurance - Injury on business premises
Product liability insurance - Injury using business products
Employer’s liability insurance - injury at work
Plate glass insurance - glass - Burger king gas leak
Motor insurance
Fidelity guarantee insurance - theft of stock from employee
Motor insurance types
Third party - damage to another person
Third party, fire and theft - damage to another person and theft
Comprehensive - damage caused to the car, person driving and third party
Insurance a household should have
Health insurance
Life assurance - compensation to family - Whole life, Endowment
House and contents Insurance
Motor insurance
Mortgage protection insurance - due to illness death etc
Household and business Insurance similarities and differences
Similarities Motor insurance Obey principles Proposal forms Claims Differences Business more risks Higher premium paid
Reasons for taxation
To raise money
To redistribute wealth - balanced economy
To discourage consumption - cigarettes, alcohol
To finance our national debt
Taxes paid by households
PAYE - direct tax on income earned from employment
Progressive tax - more you earn the more you pay
PRSI - employee’s wages
VAT - indirect tax charged on the sale of goods and services
Motor tax
CGT - Capital Gains tax - when they sell an asset
CAT - Capital acquisitions tax - gifts and inheritance
DIRT - on the interest on its savings account
Forms used in PAYE tax
P45 - leaves the job - pay earned and PAYE and PRSI paid - sign on the dole or give to a new employer
P60 - end of every tax year - pay earned and PAYE and PRSI paid - tax refunds and social welfare payments claims
P21 - end of tax year - Revenue gives to employee - difference between how much he paid and owed
Form 12A - start working for the first time - if not the pay emergency tax
Taxes paid by business
Self assessment Income tax Corporation tax (12.5%) VAT Commercial rates - pay to local council Employer's PRSI Custom duties Pay As You Earn
How does VAT impact a business
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