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Compare the similarities and differences for businesses and households in relation to taxation - Leaving Cert Business - Question 6(C) - 2022
Question 6(C)
Compare the similarities and differences for businesses and households in relation to taxation. Use any three of the following headings to structure your answer: Co... show full transcript
Worked Solution & Example Answer:Compare the similarities and differences for businesses and households in relation to taxation - Leaving Cert Business - Question 6(C) - 2022
Step 1
Corporation Tax
Answer
Certain businesses, particularly limited companies, are required to pay corporation tax based on their profits. This tax is calculated on the overall earnings of the business, unlike households, which do not have this obligation. Limited companies must ensure compliance with the corporation tax guidelines, while individual households are exempt from this tax.
Step 2
PAYE
Answer
Households that employ individuals, or individuals themselves if self-employed, pay PAYE (Pay As You Earn) tax on their income. PAYE is collected directly from wages by employers, whereas businesses, such as limited companies, do not pay PAYE on their profits. Instead, they must ensure that their employees are taxed correctly under PAYE regulations.
Step 3
Capital Gains Tax
Answer
Both households and businesses are subject to Capital Gains Tax on profits made from the sale of assets. When an asset is sold, if there is a profit made, Capital Gains Tax must be calculated on the difference between the sale price and the original price paid for the asset. This applies equally to businesses and individuals, emphasizing a similarity in tax obligations related to asset disposal.