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Explain each of the following: (i) PAYE (ii) PRSI - Junior Cycle Home Economics - Question 10 - 2005
Question 10
Explain each of the following: (i) PAYE (ii) PRSI
Worked Solution & Example Answer:Explain each of the following: (i) PAYE (ii) PRSI - Junior Cycle Home Economics - Question 10 - 2005
Step 1
PAYE
Answer
PAYE stands for 'Pay As You Earn'. It is a system of income tax that is deducted directly from an employee's gross income. The government uses this tax revenue to fund public services and infrastructure within the country. The deductions occur monthly based on the employee's earnings and tax obligations, ensuring that tax payments are spread throughout the year rather than being due as a lump sum.
Step 2
PRSI
Answer
PRSI stands for 'Pay Related Social Insurance'. This is a mandatory contribution deducted from gross income to fund various social welfare benefits such as unemployment benefits, maternity leave, and sickness payments. This system ensures that employed individuals contribute to a social safety net that provides support in times of financial need.