Chap 12 Household Insurance & Taxation. 1. The type of insurance households need. Product liability Employers PRSI Public liability Property insurance- (premises, land etc) Motor Insurance- fully comprehensive - third party cover
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- third party cover
- third party, fire & theft
This can be directly by use on formal over the counter discussion, telephone call, or use of the internet.
Insurance Brokers may also be used to act independently of insurance company’s and they give unbiased advice on the best insurance to buy.
This is completed by the person seeking insurance. It includes details such as name, age, address, occupation etc.
III Assessing the risk & calculating the premium
Insurance company’s calculate the risk and premium. Factors that influence the size of the premium include, value of item being insured, the level of risk involved
If proposal is accepted
The person seeking insurance must provide all the information the insurer needs. The insured must disclose all material facts to enable the insurer to calculate the premium for the risk involved.
If the insured person is found to have withheld any information, the insurance firm can treat the contract as void.
There must be no element of profit to the policy - holder, nor any element of loss. The objective of insurance is to place the insured part in the same financial position after the loss as they were before the loss occurred.
Seeks to prevent a person making a profit from insurance by insuring an item with more than one insurance company. In such a situation, the compensation will only be paid once. Each of the companies involved contributing to the loss in proportion to the sums insured with them.
Example: Person insured with two companies cannot gain two separate full amounts of compensation. They must agree to pay out only to the amount of the loss suffered.
Discuss the similarities & differences between managing household and business insurance?
Def: Insurance 1/2 lines
Employers deduct the tax automatically from their employee’s wages and pass it on to the revenue commissioners. This system is progressive, so the more you earn, the greater income tax has to be paid.
This is a tax on company’s profits. The govt. has reached an agreement with the European Commission for the introduction of a 12 ½ % corporate rate on trading income since 1st January 2003. This is seen as quite a low percentage but it is necessary to attract foreign investment in this country.
This is the system of tax collection used in Ireland. Businesses do not have to pay this tax but they must register as an employer with the revenue commissioners. Employers deduct the tax automatically from their employee’s wages and pass it on to the revenue commissioners.
VAT - Is a tax paid by consumers on certain goods and services. When goods/services are bought, VAT is paid. The two main VAT rates are 13 % and 21 ½ %.
Discuss the similarities & differences between managing household and business tax?
Def: TAX 1/2 lines
All new employees to the PAYE system follow the same procedure.
(A) Distinguish between the following taxation forms: Form P21 and Form P60.
(B) From the following information, calculate the net annual take-home pay of Ms. Joan
Joan McCormack is an employee of Lynch Printers Ltd and earns a gross annual salary of
She is allowed the following tax credits: Single Person credit of €1,760 and PAYE credit of
€1,760. The income tax rates are: 20% on the first €34,000 (standard rate cut-off point) and
41% on the balance. The employee PRSI rate (including the health levy) is: 6% on the first
€48,800 and 2% on the balance.
(C) Explain the term TQM and describe how it can be of benefit to an organisation.
Form P21 is known as a ‘balancing statement’. All PAYE taxpayers are entitled to request a
Form P21 annually from the Inspector of Taxes. It is an end of year summary of an
employee’s tax situation and contains all details of income, allowances and the calculations of
the tax payable at the various rates for the year. Form P21 will indicate if an employee has
overpaid or unpaid tax for the year. If an employee has overpaid tax, the Inspector of Taxes
will issue a tax refund. If an employee has underpaid tax, the Inspector of Taxes will issue a
A P60 is issued by an employer to each of his/her employees at the end of each tax year. It is a certificate which shows details of gross pay, and tax and PRSI deductions made during the year. After 31 December each year, all PAYE taxpayers receive from their employers a Form P60 which has two parts. A PAYE taxpayer has a statutory right to this document and it is used as proof of income for various purposes, e.g. education grants.
TQM or Total Quality Management is a long-term focused effort to change all parts of an organisation to produce the best products or services for its customers. There are basically three principles to a TQM approach:
• Satisfying customer needs
• Providing top quality products and services
TQM of benefit to an organisation (describe):
• Quality of products
• Reduced costs
• Staff motivation
• Public image
• Customer satisfaction