Taxation - Chapter 9

Question 1

What is tax?

Answer 1

Tax is a compulsory payment to the government charged on income, business profits or added to the price of goods and services.

Question 2

What is PAYE?

Answer 2

Pay As You Earn - Is a type of tax that people pay on their wages.

Question 3

What is USC?

Answer 3

Universal Social Charge - is a tax charged on income over a certain amount.

Question 4

What is VAT?

Answer 4

VAT: Value Added Tax - this is tax charged on goods and services.

Question 5

What is LPT?

Answer 5

Local Property Tax - this is a tax paid by owners of residential property

Question 6

What is VRT?

Answer 6

Vehicle Registration Tax - this is a tax paid by those who purchase and register a new car

Question 7

What is Motor Tax

Answer 7

Motor Tax is a compulsory tax paid for all owners of a vehicle.

Question 8

What is DIRT?

Answer 8

Deposit Interest Retention Tax is a tax paid on interest earned on savings.

Question 9

What is CAT?

Answer 9

Capital Acquisition Tax is a tax paid on gifts and inheritance (wealth left to another person when you die)

Question 10

What is CGT?

Answer 10

Capital Gains Tax - this is a tax paid on the profits made from the sale of assets e.g. property & investments

Question 11

What are Custom Duties?

Answer 11

Customs Duties are a tax paid on goods imported into Ireland from a foreign country.

Question 12

What are Excise Duties?

Answer 12

Excise Duties are a tax paid on certain goods e.g. oil, alcohol, tobacco.

Question 13

What is Stamp Duty?

Answer 13

Stamp Duty is a tax paid on written documents e.g. property

Question 14

What is Direct Tax?

Answer 14

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

Question 15

What is Indirect Tax?

Answer 15

Indirect Tax is charged as income is spent on goods and services. These are paid directly to the Revenue by the shopkeeper.

Question 16

What is Tax Avoidance?

Answer 16

is when an individual uses the taxation rules to reduce the amount of tax they pay. Tax avoidance is a legal practice.

Question 17

What is Tax Credit?

Answer 17

This is an amount by which a person’s annual tax bill can be reduced by. The amount depends on the person and their individual circumstances.

Question 18

What is Tax Evasion?

Answer 18

Tax evasion is when a person deliberately does not declare some or all of their income in order to avoid paying the correct tax. It is illegal and you can be sent to prison if you are evading tax.

Question 19

What is a wage?

Answer 19

A Wage is payment received for work done. It is calculated on the basis of actual work completed based on time or pieces made.

Question 20

What is commission?

Answer 20

payment received based on the value of goods sold. It motivates the employee to sell more.

Question 21

What is a salary?

Answer 21

A Salary is a fixed annual payment made to an employee for work. This is usually paid in 12 monthly installments.

Question 22

What is Tax Liability?

Answer 22

Tax Liability is the amount of income that must be paid over to the Revenue Commission.

Question 23

What is a wage slip?

Answer 23

Wage slip is a statement from your employer showing your gross pay (before deductions), all deductions made and your net pay (after deductions)