Taxation Isadora

Question 1

What is tax

T I a c p t t g c o I

Answer 1

Tax is a compulsory payment to the government charged on income, It is used to fund public services e.g healthcare.

The Office of the Revenue Commissioners is responsible for collecting Tax in Ireland

Question 2

What is PAYE
i a t o i t t p p o t w. T I d a s b t e a p t t r

Answer 2

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.

Question 3

What is USC
I a t c o i o a c a

Answer 3

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

Question 4

What is VAT

i t c o g a s

Answer 4

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

Question 5

What is LPT

I a t p b o o r p

Answer 5

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

Question 6

What is VRT

I a t p b t w p a r a n c

Answer 6

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

Question 7

What is moter tax

I a c t p f a o o a v. T m i u t i r

Answer 7

this is a compulsory tax paid for all owners of a vehicle. This money is used to improve roads.

Question 8

What is DIRT

I a t p o i e o s

Answer 8

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

Question 9

What is CAT

I a t p o g a i

Answer 9

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

Question 10

WHAT IS CGT

I a t p o t p m f t s o a (Example property and investments)

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

A t p o g i i i f a f c

Answer 11

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

Question 12

What are excise duties

a t p o c g ( EXAMPLE o a t)

Answer 12

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

Question 13

What are stamp duties

T p o w d (EXAMPLE Property)

Answer 13

this is a tax paid on written documents e.g. property

Question 14

What is direct tax

i c a i i e

Answer 14

Direct Tax is charged as income is earned

Question 15

What is indirect tax

i c a i i s o g a s

Answer 15

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.

Question 16

What is tax avoidance

W 1i u t t r t r t a o t t p

Answer 16

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.

Question 17

What is tax credit

i a a b w a p y t b c b r b.

Answer 17

Tax Credit: this is an amount by which a person’s annual (yearly) tax bill can be reduced by

Question 18

What is tax evasion

i w a p d d n d s o a o t i i o t a p t c t (this is illegal and u can be sent to prison for this

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 (or any tax at all). It is illegal and you can be sent to prison if you are found to be evading tax.

Question 19

What is a wage

I p r f w d. I i c o t b o t b o a w c b o t o p m

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 time rate

Answer 20

wage calculated based on the number of hours worked.

Question 21

What is piece rate

Answer 21

wage calculated based on amount of work done e.g. paid per brick

Question 22

What is a salary

Answer 22

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

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).

Question 24

What is gross pay

Answer 24

Gross Pay: is the pay before all deductions.

Question 25

What is net pay

Answer 25

Net Pay: is gross pay minus all deductions. It is also called take-home pay.

Question 26

What is statutory deductions

Answer 26

Statutory Deductions: These are compulsory deductions which every worker is required to pay by law e.g. PAYE, PRSI, USC

Question 27

What is Non-Statutory Deductions (Voluntary):

Answer 27

These are not compulsory deductions.
A worker can choose to pay them e.g. pension, health insurance, trade union.

Question 28

What is disposable income

Answer 28

is the income that remains when all income taxes and compulsory payments have been made.

Question 29

What is tax rate

Answer 29

Tax Rate is the percentage of tax that is levied on a person’s income.
Standard rate is 20% and higher rate is 40%

Question 30

What is tax credit

i t a b w a p a t b m b r

Answer 30

Tax Credit is the amount by which a person’s annual tax bill may be reduced. E.g. Single, Widow, Married

Question 31

What is standard rate cut off point (SCROP)

Answer 31

Standard Rate Cut Off Point (SRCOP) is the amount of income that will be taxed at the standard rate of tax (20%). Any amount greater than the cut-off point (€36,800) will be taxed at the higher rate (40%)

Question 32

What is tax liability

Answer 32

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