Unit 28


Topics covered within this unit: 28.1 Revision of Money matters 1 28.2 Percentage increase or decrease


28.3 Income tax and other deductions on earnings


The Learning Outcomes covered in this unit are contained in the following sections:


N.1e N.2c AF.1a


Key words Gross income


Gross tax Tax credit Net tax Net income


28.1 Revision of Money matters 1


By the end of this section you should be able to: ● recall information from Section B, Unit 13 and solve revision problems


● ● ● ● ●


Money matters 2


Something to think about …


Chris is very excited because he has a new job as an electrician and is going to get paid €35 000 a year.


Paula says: ‘But you won’t actually get that much money, because you have to pay income tax on every cent you earn.’


Chris fi nds out he has to pay gross tax on his wages at 21%, but he has something called a ‘tax credit’ worth €1 700.


What will his net wage be at the end of his fi rst week of employment?


We have already learned about many diff erent concepts (ideas) related to money. For example, we discovered a person has to pay VAT on many items purchased in shops. We discovered how to calculate profi t (or loss) on the sale of items. We fi gured out how to convert money to diff erent currencies, and how to choose the best rate. Finally, we explored the diff erence between simple interest and compound interest on savings and loans. Below are some of the key words we met in Section B, Unit 13.


● VAT: Value added tax (VAT) is a tax charged on the sale of most goods and services in Ireland Profi t (or gain) = selling price – cost price


Loss = selling price – cost price (loss will be a negative value)


Interest is the sum of money that you pay for borrowing or that is paid to you for investing Simple interest is interest which is calculated on the initial principal


Compound interest is interest that is calculated not only on the initial principal, but also the accumulated interest


● An exchange rate is the rate at which one currency may be converted into another


Be sure you are familiar with the formulae presented in Section B, Unit 13 before you complete the practice questions below.


446


Linking Thinking 1


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