KEY PERSONAL TAXES1.4
Textbook pp. 48-64
Links: 1.11, 1.12, 3.4, 3.5, 3.10, 3.11
Explain key personal taxes and charges and suggest the occasions when and why they might arise.
Pick out four large words from this word cloud and explain them in relation to this unit.
1. ____________________________________________________________________________________________
2. ____________________________________________________________________________________________
3. ____________________________________________________________________________________________
4. ____________________________________________________________________________________________
Discuss what these words tell you about this unit. Are there any small words that you are surprised to see? Why?
Before After
Yes I agree No I disagree Statement Yes I agree No I disagree
Taxation is compulsory by law
Non-statutory deductions are payable by law
Your PPS number has nine letters
USC increases income
PAYE is a tax
BEFORE WE BEGINDo this exercise individually or in pairs. Tick ü whether you agree or disagree with the statements. Revisit it after the unit to see if you have changed your mind about any of them.
Key Words
26
Tax – Taxes and charges collected by the state to pay for things for the country.
Income – There is a tax on income called PAYE.
Deductions – Are taken away from pay e.g. income tax.
Gross – Gross pay is income before deductions.
27
KEY PERSONAL TAXES 1.4
Read the following statements. Tick ü whether you believe them to be true or false.
Statement True False
GAA lotto winnings are regular income
Gross pay is take-home pay
Voluntary deductions are payable by law
UCH is a non-statutory deduction
PAYE is a form of tax
Net pay is sometimes greater than gross pay
USC = Universal Social Change
Statutory deductions are not payable by law
Union fees are non-statutory deductions
PRSI = Pay Related Society Insurance
QUESTIONS 1. Complete this sentence by filling in the missing words.
Taxation is the taxes and charges collected by the s____________ to pay for things that we all share and
need as a c__________________ .
2. Why is tax necessary?
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
True or False?
• Affectseveryone’squalityoflife.
• Incomeforthestatewhichisthenusedtopayforcapitalandcurrentexpenditure.
• Providesessentialservicesforthepeopleofthecountrye.g.educationandhealthcare.
• Taxescollectedpayswages/salariesforgovernmentworkerse.g.teachersandnurses.
üü
üü
üü
ü
ü
ü
ü
tate
ountry
28
BE BUSINESS WORKBOOK: PERSONAL FINANCE1.4
3. Compose a tweet from the ‘Be Business’ account in response to Dermot.
Dermot @14PF@bebusiness Is gross pay before or after tax?@14PF
1:05 PM - 10 Dec 17
Follow
4. Complete the following definitions by filling in the missing words.
Gross pay = B____________ pay + overtime + commission + bonus
Net pay = Gross pay – d___________________________
5. What do the following letters stand for?
PAYE
USC
PRSI
PPS
DIRT
6. Name two statutory deductions.
_________________________________________________________________________________________________
_________________________________________________________________________________________________
7. Name two non-statutory deductions.
_________________________________________________________________________________________________
_________________________________________________________________________________________________
Pay as you earn
UniversalSocialCharge
PayRelatedSocialInsurance
PayrollPersonellSystem
DepositInterestRetentionSystem
Hi Dermot,Grosspayisbeforetaxandbeforeanydeductionshavebeenmade.
asic
eductions
PAYEandPRSI
Pension scheme and trade union subscriptions.
29
KEY PERSONAL TAXES 1.4
8. Marian Walsh works for Mus4U. She earns €400 a week. Her income tax is 20%.
a) Calculate Marian’s net pay.
€
Gross Pay
Income Tax
Net Pay
Remember that tax credits reduce tax.
b) Marian’s tax credit is €30 per week. Calculate her net pay based on the information given above.
€ €
Gross Pay
Income Tax (20% of €400)
Less Tax Credit
Taxation Payable
Net Pay
PAYE has two different rates. The standard rate is 20% of the first €33,800 earned annually, therefore weekly = €33,800/52 = €650. The higher rate is charged at 40% on all income earned weekly over €650. (This may change after our budgets have been prepared.)
c) Marian has received a promotion and a pay rise and now earns €850 a week. Her PAYE tax is 20% on the first €650 she earns weekly and 40% on the remainder. Marian’s tax credit is €40 per week. Calculate her net pay.
€ €
Gross Pay
Income Tax (20% of €650)
40% of Remainder (€850 – €650) = €200
Less Tax Credit
Taxation Payable
Net Pay
9. Gerry Madden works for HealthyU. He earns €900 a week. His PAYE tax is 20% on the first €650 and 40% on the remainder. Gerry’s tax credit is €40 per week. Calculate his net pay.
€ €
Gross Pay
Net Pay
Income tax (20% of €650)40% of remainder (900 - 650) = 250Less tax credit
130
100
(40)
130
80
(40)
80
(30)
900
190
710
850
170
680
400
50
350
400
80
320
30
BE BUSINESS WORKBOOK: PERSONAL FINANCE1.4
10. Margaret O’Shea works for Arty Crafts Ltd, a private limited company. Margaret earns €52,000 a year. Her PAYE tax is 20% on the first €650 she earns a week and 40% on the remainder. Her tax credit is €40 per week. Calculate Margaret’s weekly net pay.
€ €
Gross Pay
Gross Weekly Pay
Income Tax (20% of €650)
40% of Remainder
Less Tax Credit
Taxation Payable
Net Pay
11. David Doran earns €40,000 a year. His PAYE tax is 20% on the first €650 he earns in a week and 40% on the remainder. David’s tax credit is €30 per week. Calculate his weekly net pay.
€ €
Gross Pay (weekly)
Income Tax
20% of €650
40% of Remainder
Less Tax Credit
Taxation Payable
Net Pay
12. Fill in the Total and Net Pay on the following wage slip.
Name Period Gross Pay Deductions Net Pay
(Week 1) Basic Overtime Total PAYE PRSI USC Savings VHI
Martina Waldron
01/01/2018– 07/01/2018
€700 €150 €110 €28 €25 €54 €10.34
13. Jamie Fitzgerald worked 38 hours at €25 per hour and five hours overtime paid at double time. Jamie’s deductions are: PAYE €96, PRSI €35, USC €32; union fees €8 and VHI €22.
a) Complete Jamie’s wage slip.
Name Period Gross Pay Deductions Net Pay
Basic Overtime Total PAYE PRSI USC Savings VHI
b) What was Jamie’s gross pay?
_________________________________________________________________________________________________
130
140
(40)
130
47.69
(30)
€622.66
€1,007
€850
€1,200 €96 €35 €32 €8 €22€250€950(week 1)01/01/2018-07/01/2018
Jamie Fitzgerald
52,000
1,000
230
770
769.23
147.69
621.54
(1,000 - 650) = €350
(769.23 - 650) = €119.23
€1,200
31
KEY PERSONAL TAXES 1.4
c) What were Jamie’s total deductions?
_________________________________________________________________________________________________
d) What was Jamie’s net pay?
_________________________________________________________________________________________________
e) Name two statutory deductions for Jamie.
_________________________________________________________________________________________________
f) Name a non-statutory deduction for Jamie.
_________________________________________________________________________________________________
14. Tax is always charged as a percentage (%) of income.
What are the current rates for PAYE?
20__ Standard Rate Higher Rate
Single person 20% 40%
First €
15. What are the current rates of the Universal Social Charge (USC)?
Gross Income USC Rate Amount of USC to pay if you earn the full amount
Up to % €
Up to % €
Up to % €
Above % €
Remember that tax rates for a married person are different.
See www.revenue.ie for up-to-date taxation information
€193
€1,007
PAYE,PRSI
VHI
16
38,800 Remainder
€12,012
€18,668
€70,044
€70,044.01
1
3
5.5
8
€120.12
€199.68
€2,825.68
Depends on how much you earn.
32
BE BUSINESS WORKBOOK: PERSONAL FINANCE1.4
16. What is a PPS Number used for?
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
17. Overtime is usually paid at a higher rate than the normal working rate. Why might that be?
_________________________________________________________________________________________________
_________________________________________________________________________________________________
18. Sales people are often paid on a commission system. Why?
_________________________________________________________________________________________________
_________________________________________________________________________________________________
19. Are there any disadvantages for the employee of being paid on a commission basis?
_________________________________________________________________________________________________
_________________________________________________________________________________________________
20. Study the following carefully and note the information provided. Fill in the missing figures.
Employee no 6666
Employee name:
Philip Byrne
DatePay period Week 2
Nox10PPS No1234567SH
PRSI Class
Payments Deductions
Basic wage €2000.00 PAYE PRSI USC Pension
€520.00 €60.00 €100.00 €60.00
Total €2000.00 Total deductions Net pay
Remember that net pay is your take-home pay.
Thisisauniquereferencenumberthathelpsyouaccesssocialwelfarebenefits,publicservicesand
information in Ireland.
Asovertimeisadditionalhoursworkedoveraperson’snormalworkingtime,itispaidatahigherrate.
To encourage the employees to sell more. The more they sell, the more commission they make.
Ifnosalesaremadetheemployeemightreceivenoincomeoronlyabasicincome.
€740.00 €1,260.00
33
KEY PERSONAL TAXES 1.4
21. Complete this crossword.
15
4 5 6
2
1
3
8 109
11
13
14
16 17
18
19
7
12
Across 2. A duty/tax on imported goods (goods
brought into Ireland from abroad) (7)
4. Income tax Pay As You Earn (4)
8. Income on savings or the cost of borrowing (8)
11. Universal Social Charge (3)
12. When your account balance is a minus figure, your account is over______________.
13. Putting your money/savings into products or schemes that should make a profit (income) (11)
14. ______________ tax is tax on companies’ profits (11)
18. Deductions that are compulsory (you must pay them) (9)
19. It allows you to withdraw more money (a limit will be set in advance) than you have in your bank account (9)
Down 1. A tax on goods and services (3)
3. Long-term loan used to buy a house – typically for 20 to 30 years, they are provided by financial institutions (8)
5. A duty/tax on some home-produced goods (6)
6. Property or other assets, which the lender can take if you fail to repay the loan (10)
7. Good track record of paying back other loans and of being a regular saver (12)
9. Deductions that are voluntary (you choose to pay them), e.g. health insurance (12)
10. Money invested in a company, receive dividend part of profits (6)
15. Taxation is normally expressed in a
_______________________________________ (10)
16. Given to the Department of Social Protection and used to pay social welfare benefits and pensions (4)
17. Tax on interest earned on savings (4)
P A Y E C
E
R A W
CRE
C U S TAV
O M S
I NONSTATUTORY
T E RTGAGE
E SHARES
TU S C
X
I N V ESI
S TALLO
M E N TID
S
C O R P O R A T I ORTHY
WN
SRP
T A TNECR
U T O RID
Y
LAE
O V EGA
R D R A F T
I T
O
34
BE BUSINESS WORKBOOK: PERSONAL FINANCE1.4
Explain these key terms.
Taxation
Gross pay
Net pay
Statutory deductions
Non-statutory deductions
Union subscriptions
Wage slip
Tax rates
Tax credits
Tax allowances
Revenue commissioners
Corporation tax
VAT
Customs duties
Excise duty
Property tax
Are you ready to go on to the next unit?
1.4 Read the Learning Outcome Getting ready Revisited Got it!
Reflect on your learning:
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
Looking Back
Moving On
Now revisit the ‘Before We Begin’ exercise.
The taxes and charges collected by the state to pay for things that we all need as a country.Totalmoneyearnedbeforeanydeductionshavebeenmade.
Take-homepayafterdeductionshavebeenmade.
Compulsorydeductionsfrompay.
Deductionsfrompaythatarevoluntary.
Fee paid for membership of a trade union.
Givesdetailsofgrosspay,deductionsandnetpay.
Reducestheamountoftaxyouhavetopay.
Reducestheamountoftaxyouhavetopay.Takenfromgrosspay.
StatebodyresponsibleforcollectingtaxesinIreland.
Taxonacompany’sprofits.
Value-addedtax.Ataxongoodsandservices.
Differentratesapplytodifferentlevelsofincome.
Taxes on imported goods.
Tax on home produced goods.
Tax on your own property.
35
KEY PERSONAL TAXES 1.4
Key Check 1. What skills have you developed while studying this topic?
_____________________________________________________________________________________________
_____________________________________________________________________________________________
2. What new technology have you used in this topic (useful websites/YouTube clips/tweets)?
_____________________________________________________________________________________________
_____________________________________________________________________________________________
3. What research have you done? Did you use a trustworthy source? Has it dated?
_____________________________________________________________________________________________
_____________________________________________________________________________________________
4. What new information have you discovered?
_____________________________________________________________________________________________
_____________________________________________________________________________________________
5. How has the learning influenced your thoughts, opinions, attitudes and behaviour?
_____________________________________________________________________________________________
_____________________________________________________________________________________________
6. How might the learning influence your future?
_____________________________________________________________________________________________
_____________________________________________________________________________________________
7. What values have you encountered in this unit?
_____________________________________________________________________________________________
_____________________________________________________________________________________________
8. What decisions have you made in this unit?
_____________________________________________________________________________________________
_____________________________________________________________________________________________
Top Related