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Taxation 1 > Introduction and Basic Terminology > Flashcards

Introduction and Basic Terminology Flashcards

1
Q

How does tax impact everyday life

A

Pay tax on everyday purchase
Pay tax on employment income
Tax implications on buying and selling assets
Tax on gifts and inheritance

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2
Q

What is capital aquisitions tax

A

tax on gifts and inheritance

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3
Q

What are the purposes of tax

A
  • Finance government activities
  • Economic objectives eg reduce inflation
  • Redistribute wealth - social welfare scheme
  • Social issues and curving behaviour eg smoking
  • Promote enterprise through grants
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4
Q

What is progressive tax

A

tax rate increases more as taxable amount increases

takes into the ability to pay

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5
Q

examples of taxes that use progressive tax rule

A

income tax

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6
Q

what is proportional or flat tax

A

tax is charged at the same rate for everyone regardless of income or wealth

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7
Q

example of proportional tax

A

capital tax

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8
Q

what is regressive tax

A

tax is applied regardless of income so low and high earners pay the same amount

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9
Q

examples of regressive tax

A

VAT
Customs
Carbon Tax

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10
Q

What is direct tax

A

tax directly applied to the person who bears the tax burden

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11
Q

examples of direct tax

A

tax on all forms of income and wealth

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12
Q

what does DIRT stand for

A

deposit interest retention tax

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13
Q

what is indirect tax

A

tax levied on goods and services and collected from those who do not bear the tax burden

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14
Q

example of indirect tax

A

VAT
paid over tp government at different stages of production of the goods

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15
Q

what is a tax base

A

number of people paying tax or area in which tax is levied

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16
Q

what does it mean to broaden the tax base

A

ensure the tax system does not rely on a small number of tax payers

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17
Q

what does a narrow tax base mean

A

relying on a small tax payer base, leaving government vulnerable

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18
Q

what is tax planning

A

used by tax payers to reduce their tax bill by taking advantage of the legislation that is there

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19
Q

what is tax avoidance

A

loopholes to reduce tax liability, not using the legislation in the intended manner

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20
Q

what is tax evasion

A

deliberately breaking the law in order to avoid paying taxes or paying the correct amount due

ie not filing tax returns

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21
Q

Sources of tax law in ireland

A

Legislation
Case Law precedent
European influence
EU Directives
Revenue practice

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22
Q

examples of tax legislation in ireland

A

Taxes Consolidation Act 1997 (Income Tax, Corporation Tax and Capital Gains Tax)

Value-Added Tax Consolidation Act 2010

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23
Q

examples of case law that influence tax

A

common law system
decisions of irish courts from binding precedents
UK case law

24
Q

examples of some of the first taxes that curved behaviour in ireland

A

Hearth tax - # fireplaces
Window tax

25
Q

what are Adam Smith’s canons of taxation

A

equality
certainty
convenience
efficiency

26
Q

what does the equity canon mean

A

there should be fairness and tax should be based on ability to pay (progressive tax)

27
Q

what is horizontal equity

A

taxpayers with equal capacity should bear the same tax burden

28
Q

example of horizontal equity

A

WE SHOULd all pay equally for streetlights as everyone benefits from them equally

29
Q

what is vertical equity

A

tax should be based on ability to pay

30
Q

how can ability to pay be measured

A

income v capital
consumption v saving
age, marital status, number of children

31
Q

what does certainty canon mean

A

tax payers should know when and how much they have to pay

32
Q

what are some means of improving certainty in tax

A

clear legislation
administrative guidance

33
Q

what does convenience canon mean

A

it should be easy to pay

eg deduction at source of income

34
Q

what does efficiency canon mean

A

from an admin perspective

and it should also minimise effects on behvaiours (except when tax is trying to impact bheaviour)

35
Q

who are the stakeholders in our tax system

A

department of finance
revenue
tax appeals commission
taxpaying community
tax profession

36
Q

role of department of finance in tax system

A

advise and support minister for finance

implementation of government policy

preparation of annual budget

initiate finance bills

37
Q

what does revenue do

A

assess, collect and manage tax

38
Q

what does the tax appeals commission do

A

hears appeals against revenue

39
Q

who are the tax profession

A

professional tax advisors and professional bodies

40
Q

what does PAYE stand for

A

pay as you earn

41
Q

what does self assesment system mean

A

calculating and paying taxes is on you

for people that dont PAYE

42
Q

what is the 2022 tax year

A

12 months ended 31 decemeber 2022

43
Q

what does LPT stand for

A

local property tax

44
Q

who are the two types of individual tax payers

A

PAYE
Chargeable person

45
Q

what is a chargeable person

A

a person who is in receipt of income but tax is not withheld as they get paid
eg self employed

46
Q

what is the standard tax rate

A

20%

47
Q

what is the higher tax rate

A

40%

48
Q

what is the DIRT rate

A

33%

49
Q

what is the PRSI rate

A

4%

50
Q

what are examples income tax credits

A

paye credit
personal or married tax credits

51
Q

what are tax relief examples

A

medical expenses
pension contribution

52
Q

what is the tax relief % for medical expenses

A

20%

53
Q

what does PSWT stand for

A

professional services witholding tax

54
Q

what does RCT stand for

A

relevant contracts tax

55
Q

what is gross income

A

income from all sources

56
Q

what is taxable income

A

income after deducting personal reliefs allowed

Taxation 1 (16 decks)

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