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Read the information supplied and answer the questions which follow - Leaving Cert Business - Question 6 - 2018
Question 6
Read the information supplied and answer the questions which follow. Ben Caffrey is a manager at Fun-Go Holidays Ltd and earns a gross annual salary of €55,000. His... show full transcript
Worked Solution & Example Answer:Read the information supplied and answer the questions which follow - Leaving Cert Business - Question 6 - 2018
Step 1
The PAYE which Ben has to pay
Answer
To calculate Ben's PAYE:
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Determine gross income:
Ben's gross income = €55,000 + €5,000 (holiday voucher) = €60,000
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Calculate PAYE based on the band:
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First €34,550 taxed at 20%:
Taxes on first €34,550 = €34,550 * 0.20 = €6,910
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Remaining income:
Remaining income = €60,000 - €34,550 = €25,450
Taxes on remaining income = €25,450 * 0.40 = €10,180
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Total PAYE before tax credits:
Total PAYE = €6,910 + €10,180 = €17,090
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Apply tax credits:
Total Tax Credits = Single Person Tax Credit €1,650 + PAYE Tax Credit €1,650 + Dependent Relative Tax Credit €70 = €3,370
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Final PAYE payable:
PAYE Ben has to pay = €17,090 - €3,370 = €13,720
Step 2
Step 3
The total amount of USC
Answer
To calculate the total amount of USC:
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Breakdown the income for USC:
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€12,012 at 0.5%:
USC on €12,012 = €12,012 * 0.005 = €60.06
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€7,360 at 2%:
USC on €7,360 = €7,360 * 0.02 = €147.20
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Remaining income:
Remaining income = €60,000 - €12,012 - €7,360 = €40,628
USC on remaining income = €40,628 * 0.0475 = €1,929.83
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Total USC:
Total USC = €60.06 + €147.20 + €1,929.83 = €2,137.09
Step 4