Help with maths paper 1 q1

kieranmcg1

I know this sounds lame but i just cannot work it out . On the 2006 paper Paper 1 question 1 part c how do you work out the tax he paid each week . Whatever way my teacher gave it to us i dont have a clu what the hell she was doing can anyone help plz

akb2006

Type out the question ,ill give you a reply in 5 minutes..

Raphael

Assuming it's the Ordinary Level one, which fits with your post, it's simple enough once you undertand the process.

Colm is getting €900 a week, before tax. Now, that breaks down into three seperate parts - Untaxed, Low taxed, High taxed. The untaxed is based on his credits - The first 50 he earns is untaxed.

The two rates and the cut of point apply to his taxed - The first €240 of his taxed income is calculated at 20%. Everything after that (Which comes to 610 -> 900-240-50) is calulated at 42%

Then you just add it all up. 20% of 240 is €48, 42% of 610 is €256.20. So in total he's paying €304.20. Does that make sense?

Delphi91

Actually, tax credits are subtracted at the END, not at the begining like the TFA's used to be.

So you start with the whole salary, i.e. €900.

The first €240 is taxed at 20% which gives a tax of €48.
The rest (€900 - €240 = €660) is taxed at 42% which gives a tax of €277.20

Therefore the gross tax is €277.20 + €48 which is €325.20.

Now subtract the tax credit of €50 which gives the net tax paid each week of €275.20.

For the second part, all you need to realise is that the raise will only be taxed at the higher rate ('cos only the first €240 of her salary is at the lower rate).

So, whatever the raise is, once 42% of it is taken away, she gets to keep €20.30. Therefore this €20.30 must be 58% (100 - 42) of the raise.

Simple arithmetic then tells you that the raise must be (€20.30/58) * 100 = €35


Hope that helps?

Check here for more info: http://www.jobsearch.ie/applicants/tax.htm

Mike