Taxation Flashcards
What is Tax?
Tax is a compulsory payment to the government charged on income, business profits or added to the price of goods and services. It is used to fund public services e.g healthcare.
Who is in charge of tax collection in Irleland?
The Office of the Revenue Commissioners is responsible for collecting Tax in Ireland
What is PAYE and what does it stand for?
PAYE: Pay As You Earn - this is a type of income tax that people pay on their wages. This is deducted at source by the employer and paid to the revenue.
What is USC and what does it stand for?
USC: Universal Social Charge - this is a tax charged on income over a certain amount.
What is VAT and what does it stand for?
USC: Universal Social Charge - this is a tax charged on income over a certain amount.
What is LPT and what does it stand for?
LPT: Local Property Tax - this is a tax paid by owners of residential property
What is VRT and what does it stand for?
VRT: Vehicle Registration Tax - this is a tax paid by those who purchase and register a new car
What is Motor Tax?
Motor Tax - this is a compulsory tax paid for all owners of a vehicle. This money is used to improve roads.
What is DIRT and what does it stand for?
DIRT: Deposit Interest Retention Tax - this is a tax paid on interest earned on savings
What is CAT and what does it stand for?
CAT: Capital Acquisition Tax - this is a tax paid on gifts and inheritance (wealth left to another person when you die)
What is CGT and what does it stand for?
CGT: Capital Gains Tax - this is a tax paid on the profits made from the sale of assets e.g. property & investments
What is Custom Duties?
Customs Duties: a tax paid on goods imported into Ireland from a foreign country.
What is Excise Duties?
Excise Duties: a tax paid on certain goods e.g. oil, alcohol, tobacco.
What is Stamp Duty?
Stamp Duty: this is a tax paid on written documents e.g.
property
What is Direct Tax?
Direct Tax is charged as income is earned. It is deducted at source.
This means that the tax is charged by the person who pays the income not the person who earns the income e.g. PAYE is deducted by the employer and paid to the Revenue.
What is Indirect tax?
Indirect Tax is charged as income is spent on goods and services e.g. VAT is included in the price of goods in a shop. These are paid directly to the Revenue by the shopkeeper.
Hay is Tax Avoidance?
Tax Avoidance: is when an individual uses the taxation rules to reduce the amount of tax they pay e.g claiming the tax credits they are entitled to. Tax avoidance is a legal practice.
What is Tax Credit?
Key Term - Tax Credit: this is an amount by which a person’s annual (yearly) tax bill can be reduced by. The amount depends on the person and their individual circumstances.
What is Tax Evasion?
Tax Evasion: is when a person deliberately does not declare some or all of their income in order to avoid paying the correct tax (or any tax at all). It is illegal and you can be sent to prison if you are found to be evading tax.
What is a Wage?
A Wage is payment received for work done. It is calculated on the basis of actual work completed based on time or pieces made.
What is a Salary
A Salary is a fixed annual payment made to an employee for work.
This is usually paid in 12 monthly installments.
What is a Wage Slip?
Wage Slip is a statement from your employer showing your gross pay (before deductions), all deductions made and your net pay (after deductions).
What is Gross Pay?
Gross Pay: is the pay before all deductions.
What is Net Pay?
Net Pay: is gross pay minus all deductions. It is also called take-home pay.
