TAXATION- REVISON

Watch the video and answer the questions

on your worksheet

https://animoto.com/play/dQ7V7MLZbK4uFO
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TAXATION
Taxation is the money that all businesses
and households must pay to the
government. The government uses this
money to run the country.
The government uses this money to run the
countrys schools and hospitals and so on.

REASONS FOR TAXATION

o
o
o

To raise money
To redistribute wealth
To discourage consumption

TAXES PAID BY THE HOUSEHOLD

1.
2.
3.
4.
5.
6.

Taxes on wages- PAYE, PRSI and USC

Value Added Tax- VAT
Capital Gains Tax- CGT
Capital Acquisitions Tax- CAT
Deposit Interest Retention Tax- DIRT
Motor Tax

FORMS USED IN PAYE TAX

P45- This is a form an employer gives to an

employee when he/she leaves his/her job. It
contains the details of the gross pay the employee
earned and the PAYE, PRSI and USC deducted

P60- This is a form an employer gives to an

employee at the end of every tax year.

P21- This is a form that Revenue gives an

employee at the end of the tax year showing them
the difference between how much tax they paid
that year and how much they actually owe

TAXES PAID BY
BUSINESSES
1.
2.
3.
4.
5.
6.

Self-assessment Income Tax

Corporation Tax
Value Added Tax- VAT
Commercial Rates
Customs Duties
Employers Pay Related Social Insurance
(PRSI)

EFFECTS OF TAXATION ON
BUSINESS
1.
2.
3.
4.

Lower Profits
Lower Sales
Higher Costs
Less Overtime

CALCULATING TAXES

We used the box method to calculate taxes in

class. We will see an example on PAYE in the
next slide and it can similarly be used for
calculating PRSI and USC.
Gross pay- Pay before any deductions are
made
Net pay- Final pay once all deductions have
been made.
Tax Credits- the amounts that all income
taxpayers can deduct from their gross income
tax bill.

CALCULATING TAXES
Example: PAYE
Marys annual salary is 50,000. PAYE is paid as follows:
o First 40,000 @ 20%
o Balance @ 40%
Marys tax credits for the year are 3,000

Solution
50,000

40,000 x 20%= 8,000

10,000 x 40%

40,000

10,000 x 40%= 4,000

40,000
20%
0
GrossxTax
12,000
Minus Tax Credits (3,000)
PAYE 9,000

Now try the

questions on the
worksheet

CALCULATING
TAXES

Example: VAT
An electrical shop decides to charge 1,000
for a TV it adds 23% VAT to the price how
much does the shop sell the TV for?
Solution:
Buying Price
1,000
VAT: 1,000 X 23% = 230
Selling Price
1,230

Now try the

questions on the
worksheet

CALCULATING TAXES
Example: Capital Gains Tax
Kate bought shares in Z PLC for 5,000. She sold them
for 11,000 five months later.
Calculate the CGT payable by Kate if the rate of CGT is
33% and the first 1,000 of gains each year is exempt
from CGT.
Solution:
Kate made a profit of 6,000
Profit
6,000
Deduct annual exemption
(1,000)
Taxable Profit
5,000
CGT Payable = 5,000 x 33% = 1,650

Now try the

questions on the
worksheet