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what is taxation?
money that ALL businesses and households MUST pay to the government
reasons for taxation
- 1. redistribute wealth
- 2. raise money
- 3. discourage consumption
different types of tax (household)
- 1. PAYE
- 2. PRSI
- 4. motor tax
- 5. capital gains tax (CGT)
- 6. captial acquisitions tax (CAT)
- 7. deposit interest retention tax (DIRT)
what are tax credits?
amount that all tex payers can deduct from their gross tax bill
what does PAYE stand for?
pay as you earn
what are the forms used in PAYE?
- 1. P45
- 2. P60
- 3. P21
- 4. Form 12A
what is P45?
form er gives to ee when he leaves his job.. contains details of pay earned, PAYE and PRSI paid by ee...
what is the P45 used for?
sign onto the dole.. give to new er to make sure tax worked out properly
what is P60?
er give to ee at the end of every tax year.. contains pay earned, PAYE and PRSI paid
what is the P60 used for?
claim tax refunds and social welfare benefits
what is P21?
form that Revenue gives ee at the end of tax year showing difference of tax paid and tax owed.. also known as a balancing statement
what is the form 12A?
all ees must fill in when they start working for the very first time, sent to revenue who work out tax credits and rate of tax, if not done - emergancy tax
what is PRSI?
tax taken out of ees wages by er and paid to revenue on his behalf.. to qualify for welfare benefits in future (dental, optical, medical benefits, unemployment benefit)
what is VAT
tax that households pay when they buy products and services from a business
what is VAT not charged on?
educational, medicines, funerals, children's clothing
what is motor tax?
tax that every car owner must pay to their local council each year... depends on car's emissions level
What is capital gains tax?
tax that households pay when they sell an asset and make a profit on the sale (shares, holiday homes)
what is the annual exemption?
a small amount of the profits made in a year are tax free
when does a household not have to pay CGT?
when the sell their house and make a profit
what is captial acquisitions tax?
tax you pay on a gift or inheritance.. amount depends on value of item and who its from
who does not pay CAT?
what is DIRT?
tax householders pay on the interest it earns on its savings in a bank,credit union,building society... financial institution automatically deducts it from account and pays it to revenue
what taxes are paid by businesses?
- 1. self-assessment income tax
- 2. corporation tax
- 3. VAT
- 4. commercial rates
- 5. PRSI
- 6. customs duties
- 7. PAYE
what is self-assessment tax?
tax that self-employed entrepreneurs pay on their businesses pay on their profits.. have to work it out themselves.. 31st October deadline.. subject to revenue audits
what is tax evasion?
when tax payers deliberately fail to pay the correct amount of tax owed by not declaring the full amount of their income.. illegal.. heavy penalties
what is tax avoidance?
when taxpayers take advantage of the tax system to reduce the amount of tax they owe.. legal
what is corporation tax?
tax that companies must pay on their annual profits.. work it out themself.. subject to revenue audits
what is VAT?
tax businesses must add on to the price of goods and services they sell to customers.. get a refund of the VAT they pay
what are comercial rates?
tax that a business must pay to their local council every year.. based on business premises... helps finance the local council's activities (roads, lighting)
what is employers PRSI?
business pays this tax to revenue if it has employees.. equal to a certain percentage of the ees gross wages.. not taken out of ees wages.. paid out of profits..
what are custom duties?
tax paid on imported goods from non-EU countries.. percentage of the value of the goods
effects of taxation on a business
- 1. lowers profits
- 2. lower sales
- 3. higher costs
- 4. less overtime
similarities of household and business taxation
- 1.must register with revenue
- 2. must pay correct amount of tax on time
- 3. must keep proper tax records
- 4. both will try to avoid tax
differences of household and business taxation
- 1. business gets more tax deductions
- 2. businesses get refund of VAT they have paid
- 3. businesses collect tax from others on behalf of Revenue
- 4. businesses pay more taxes