Leela Crosby and Alysha Shroff I did the questions and Alysha did the vocabulary ACTIVITY 1 Bond- a certificate issued by a government or a public company promising to repay borrowed money at a fixed rate of interest at a specified time. Capital Gains- a profit from the sale of property or of an investment. Capital Goods- goods that are used in producing other goods, rather than being bought by consumers. Capital Loss- is the result of selling an investment at less than the purchase price or adjusted basis. Common Stock- shares entitling their holder to dividends that vary in amount and may even be missed, depending on the fortunes of the company.
There are several ways you can save for a pension. Your employer may offer a workplace pension scheme or you can take out a personal pension through an insurance company. Benefits of pensions Pension is one of the most tax-efficient ways to save for the long term, but the tax treatment of pensions depends on individual circumstances, and may be subject to change. Receiving the benefits of pensions start from the age of 66 and up to 25% of your pension fund can be taken as tax free cash. You can take your whole fund as cash in one go or as and when you need it, but the remaining 75% will be taxed at your marginal rate of income tax.
Introduction In general, tax avoidance is legal way of tax planning while tax evasion is illegal. Tax avoidance is done by taking advantage of loopholes or lacunae in the tax code to reduce tax liability. It is consider legal if the transactions involved are bona fide without violation of the provision of tax law. The complication of the tax rules and regulations for the taxpayers to comply is what make tax avoidance a challenging and interesting topic to be explored in research. It is hard for the taxpayers to up-to-date with the constant changing of the taxation rules or amendments of taxation laws.
The dividends are taxed as well. As you can see, with the money being taxed through the market, and also through dividends it is taxed two times. But, debt is only taxed one time, so when the firm makes money it gets taxed immediately. However, when the firm pays interest to its creditors the interest is not taxed. So the interest paid on debt are treated differently than dividends paid out to
The insured receives a contract which is called the insurance policy, it details with the conditions and circumstances under which the insured will be financially compensated. WHY DO WE NEED INSURANCE? Insurance is a risk managing process. When we buy insurance then we transfer the cost of a potential loss to the insurance company in
By doing this, there is reduction of risk in the society. Risk Transfer Risk management strategy in which an insurable risk is shifted to another party by means of an insurance policy. The insurer sets the policy guidelines and measures under which the insured will be paid the losses. So, based on the list of measures specified in the insurance contract, the insurer pays the insured either a sum of amount or any service based on the type of agreement
Even more, since a 401(k) plan is not insured, it is possible to lose money based on the investments you have invested in. Risky investments are meant to either result in a large capital gain or a large capital loss; however, remaining conservative will not guarantee you payout you desire. Therefore, it is recommended to spread out your investments to minimize the possible capital losses (Advantages and Disadvantages to 401(k) Plans, (n.d.), p. 1). Consequently, employers are able to limit employees on how much they would like to contribute; with this intention, the employee would not be able to save as much as he or she wants
What is life insurance? Life insurance is an agreement between you (the insured) and an insurer. Under the terms of a life insurance contract, the insurer promises to pay a certain sum to someone (a beneficiary) when you die, in exchange for your premium payments. Why would you need life insurance? The most common reason for buying life insurance is to replace the income lost when you die.
In order to keep the amount of social security benefits stable is to increase, or decrease, the social security tax to compensate for the amount of people that receive the benefits. It is possible that in the future social security benefits will only rely on direct taxes from workers, and if this does happen, social security benefits are likely to decrease. The amount of money that employers are paying in now will be less than the amount that they receive in the
The most common method of depreciating assets for financial statement purposes (as opposed to the method used for income tax purposes) is the straight-line method. Under this depreciation method, the depreciation for each full year is the same amount. Accelerated depreciation is any method of depreciation used for accounting for income tax purposes that allows greater deductions in the earlier years of the life of an asset. It is important to remember that depreciation is an attempt to match expenses with revenues (matching concept). Accountants try to spread the cost of the asset over the service life of the asset.