Deductions from Pay

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What are the two main types of deductions from pay shown on a payslip?

Statutory deductions and Non Statutory deductions

What are statutory deductions?

Compulsory deductions required by law

Give three examples of statutory deductions.

Pay As You Earn (PAYE) income tax, Pay Related Social Insurance (PRSI), Universal Social Charge (USC)

Give three examples of non statutory deductions.

Health Insurance, Pensions, Trade Union Subscriptions

What are non statutory deductions?

Voluntary deductions that workers may choose to pay

What is the purpose of the Pay As You Earn (PAYE) income tax system?

The purpose of the PAYE income tax system is to collect tax on income as it is earned.

What benefits can employees claim in the future through Pay Related Social Insurance (PRSI)?

Employees can claim certain benefits in the future, such as a state pension, through PRSI.

Who is required by law to pay statutory deductions?

Every worker is required by law to pay statutory deductions.

What is the Universal Social Charge (USC) used to fund?

The USC is used to fund government spending.

What is the difference between net pay and gross pay?

Net pay is the total pay after deductions, while gross pay is the total pay before any deductions are taken.

Study Notes

Deductions from Pay

  • There are two main types of deductions from pay: Statutory deductions and Non-Statutory deductions.
  • Statutory deductions are compulsory and required by law.

Statutory Deductions

  • Pay As You Earn (PAYE) income tax system: tax is paid on income as it is earned.
  • Pay Related Social Insurance (PRSI): allows employees to claim certain benefits in the future, e.g. state pension.
  • Universal Social Charge (USC): applies to all workers whose income is above a certain limit and is used to fund government spending.

Non-Statutory Deductions

  • Not compulsory, but workers may choose to pay them.
  • Examples: Health Insurance, Pensions, Trade Union Subscriptions, and Credit Union savings.

Gross Pay and Net Pay

  • Gross pay: total pay before any deductions are taken.
  • Net pay: Gross pay - Total deductions.
  • Net pay is also called "take home" pay, which is the actual money received.

Test your knowledge on deductions from pay with this quiz! Learn about the two main types of deductions shown on a payslip: pay statutory deductions and non-statutory deductions. Understand the importance of compulsory deductions such as PAYE and PRSI.

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