Chapter 10: Personal Taxation Flashcards
(20 cards)
What is Tax?
Tax is a compulsory payment to the government, charged on income, business profits or added to the cost of goods and services.
WHY PAY TAXES?
Essential Public Services
Governments use tax revenue (income) to fund essential public services, which benefit the community. Examples include health, education and public transport systems as well as a range of recreational amenities such as parks, playgrounds and swimming pools.
Equal Distribution of Wealth
The government uses taxes to help make sure there is a more equal distribution of wealth within the economy. People who earn more should pay more tax.
Control
The government may use taxes to promote or discourage certain activities. For example, lower taxation levels can help to increase consumer spending and job creation, whereas increased tax on cigarettes and plastic bags may reduce their consumption.
What’s A direct tax ?
A direct tax is paid on income as it is earned. It is paid by the person on whom it is imposed (levied), e.g. PAYE.
What’s Indirect taxes ?
Indirect taxes are paid on income as it is spent, e.g. VAT.
Taxes which take a higher percentage of income from low income earners are said to be
What are progressive taxes?
A progressive tax is one where the tax rate increases as income increases, so the more you earn, the more you pay.
Self-assessed income tax?
Self-assessed income tax: This is paid by those who are self-employed. The taxpayer calculates the relevant tax payment themselves.
What’s Universal Social Charge (USC): and how is it charged ?
Universal Social Charge (USC): Incomes over a certain amount are subject to USC, at different rates for different levels of income. USC is in addition to income tax.
Custom duties:?
Custom duties: This is a tax on goods imported into Ireland from outside the EU.
What agency is responsible for for tax collection in Ireland?
The Office of the Revenue Commissioners (Revenue for short) is the State agency responsible for tax collection In Ireland.
What is Excise Duty?
Excise Duty is a tax levied on specific goods and materials, often to raise revenue or discourage consumption of certain products.
What is Local Property Tax (LPT)?
Local property tax (LPT): Owners of residential properties in Ireland are liable to pay this tax. The tax payable is based on the market value of a house/apartment
What is Stamp Duty?
Stamp duty: It is most commonly associated with the purchase of property but it is also charged on financial cards (debit, credit and ATM cards).
What is Motor Tax?
Motor tax: This is a compulsory tax for all owners of motor vehicles. It is calculated on an annual basis and paid to the local authority (city or county council), which is responsible for the upkeep of local roads. Based on car engine sizes and emissions.
What is Vehicle Registration Tax (VRT)?
Vehicle Registration Tax This is a separate once-off tax on buying and registering a new car or motorcycle in the State.
What is Dirt?
Deposit Interest Retention Tax (DIRT): This is a tax on interest earned on savings. The tax is deducted at source by the financial institution.
What’s the difference between gross pay and net pay
Gross pay is pay before all deductions (statutory & voluntary deductions)
Net pay is gross pay minus all deductions. It is also called take-home pay.
What is. SCROP
The standard rate cut-off point (SCOP) is the amount of income that will be taxed at the standard rate of tax. Once a person’s income exceeds this level, that portion of income above the cut-off point will be taxed at the higher rate of tax.
What’s the difference between tax avoidance and and tax evasion?
You may be able to reduce your tax liability by knowing how to claim more tax reliefs or by spending vour money in particular ways. This is called tax avoidance and it is legal.
Tax evasion, is illegal and deliberate non-payment of tax. It usually happens when people fail to declare some or all of their income.
What is CATT and when is it payed on?
Capital acquisitions tax (CAT): This tax is paid on gifts and inheritances.
What is capital gains tax?
Capital gains tax (CGT): This is a tax on profits earned from the sale of assets such as property
(other than a main residence)
