Which of the following is the best example of an activity based tax?
The correct answer is b. A tax based on business net income. This is because the income tax is based on the economic activity generated by the business (e.g. the amount of sales realized, the amount of expenses deducted, etc.)
Activity-based taxes
The third category, activity-based examples of indirect taxes include environmental tax and financial transaction tax.
Federal excise taxes are commonly imposed on things like fuel, airline tickets, tobacco, and alcohol.
Final answer: The correct option 1) progressive income tax is the best example of a tax based on the ability-to-pay theory. This theory advocates for taxing individuals based on their income, where higher earners pay a larger percentage of their income.
Property taxes are an example of a regressive tax; the U.S. federal income tax is a progressive tax example; and occupational taxes are a type of proportional tax.
Your business may need to complete business activity statements (BAS) to report on taxes and make payments. Your BAS helps you to report on taxes like: goods and services tax (GST) pay as you go (PAYG) withholding. PAYG instalments.
Manufacturing businesses with high overhead costs use activity-based costing to get a clearer picture of where money is going. Because ABC gives specific production cost breakdowns, you can see which products are actually profitable.
Cash flows related to income taxes are classified as operating activities, unless they can be specifically identified with financing or investing activities.
In general, an excise tax is a tax is imposed on the sale of specific goods or services, or on certain uses. Federal excise tax is usually imposed on the sale of things like fuel, airline tickets, heavy trucks and highway tractors, indoor tanning, tires, tobacco and other goods and services.
There are several very common types of taxes: Income tax—A percentage of generated income that is relinquished to the state or federal government. Payroll tax—A percentage withheld from an employee's pay by an employer, who pays it to the government on the employee's behalf to fund Medicare and Social Security programs.
What are the three different types of taxes give an example for each?
All taxes can be divided into three basic types: taxes on what you buy, taxes on what you earn, and taxes on what you own. Every dollar you pay in taxes starts as a dollar earned as income. The main difference is the point of collection. Sales taxes are paid by the consumer when buying most goods and services.
- Income tax withholding. Main article: Tax withholding in the United States. ...
- Social Security and Medicare taxes. Main article: Federal Insurance Contributions Act tax. ...
- Unemployment taxes. Main article: Federal Unemployment Tax Act. ...
- Reporting and payment. ...
- Penalties.
Develop a basic understanding of how these taxes fit together, how they impact government revenues and the economy, and where you may encounter them in your daily life. Most taxes can be divided into three buckets: taxes on what you earn, taxes on what you buy, and taxes on what you own.
Ultimately, individuals pay almost all taxes.
Generally, you must include in gross income everything you receive in payment for personal services. In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options.
A progressive tax is one where the average tax burden increases with income. High-income families pay a disproportionate share of the tax burden, while low- and middle-income taxpayers shoulder a relatively small tax burden.
Any business registered for GST will need to lodge a Business Activity Statement, or BAS. This form will help the business pay their GST, PAYG installments, PAYG withholding tax, and other taxes. When a business registers for their ABN and GST, they will automatically receive a BAS when it's time to file.
Activity statements contain information about account activity, such as positions, cash balances and transactions. Statements are generated daily, monthly, and yearly for all accounts.
Simply sign in to your myGov account and access ATO services. You can then: view, lodge, revise, vary and pay your activity statement.
For example, in a factory, the number of hours a machine runs determines how much electricity is used and how much will have to be spent on maintenance. In this example, the number of machine hours is the cost driver that controls how much electricity is used and the cost of maintenance.
What types of businesses do activity-based costing?
Traditionally, activity-based costing has been used in manufacturing products but can also be applied to service industries, or businesses that provides a service instead of a product.
With activity-based costing, sometimes referred to as ABC, companies account for expenses by categorizing the source of the cost into one of four general groups: unit-based, batch-based, product-based, and facility-based costs.
In some years, the producer makes a profit and can show the amount. According to the IRS, a farmer needs to show a profit 3 out of 5 years, even if the profits are not large. Always showing a loss on your Schedule F, can alert the IRS that the operation may be a hobby and not a for-profit business.
A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business with the intention of making a profit.
Some common operating activities include cash receipts from goods sold, payments to employees, taxes, and payments to suppliers. These activities can be found on a company's financial statements and in particular the income statement and cash flow statement.
