Tax, interest rate and inflation Flashcards
(35 cards)
What is income tax?
A tax levied on all income and profit that a taxpayer receives including individuals, companies and trusts.
What is VAT (Value Added Taxes)?
A tax added to the price of some goods and services sold by businesses.
How much is VAT at the moment?
15%
Who pays VAT?
All consumers regardless of their income.
What is excise duty (sin tax)?
A tax placed on manufacture and sale of products like alcohol and tobacco.
What is a fuel levy?
A levy paid on every litre of petrol and diesel sold in SA. Part of the levy is paid to the Road Accident Fund.
What are licenses?
A form of tax since you pay fees to gain the right to watch television or own a car.
What is PAYE (Pay As You Earn)?
Employers deduct one twelfth of your estimated yearly tax from your monthly income and pay it to SARS.
What is provisional tax?
Taxpayers whose income is irregular pay tax twice a year based on their estimated taxable income.
What are interest rates?
The rate at which borrowers pay interest for the money they borrowed from lenders.
Are interest rates fixed?
No, they fluctuate as the demand for money changes.
What is a repo-rate?
Interest at which commercial banks can borrow money from the Reserve Bank.
What is simple interest?
It is calculated on the principal amount. Interest will be added to the amount that must be repaid every year.
What is compound interest?
It is when interest is charged or paid on the principal amount plus the interest to date.
What is inflation?
The continuous increase in the price of goods and services that brings about a decrease in the purchasing power of money.
What is an inflation rate?
The percentage at which the prices of foods and services increase in a year. The annual percentage change in the consumer price index.
What is the Consumer Price Index?
The instrument used to calculate price increase and the inflation rate. It measures changes in the economy as well as changes in the standard of living.
What is a direct tax?
The taxpayer pays this tax directly to the government. Nobody else is allowed to pay it.
What is an indirect tax?
One that can be passed on or shifted to another person or group.
Why do we have to pay taxes?
It is the government’s main source of income.
To whom do we pay taxes?
The South African Revenue Service (SARS)
What is tax evasion?
Using illegal methods to reduce your tax liability like lying about your income.
What is tax avoidance?
Reducing the amount of tax you pay through good financial planning.
What is import tax?
A tax levied on all goods entering the country from another country.
