Fins 2643 Potential Questions Essays

2943 Words Jun 3rd, 2013 12 Pages
Week 5: Home Ownership

1) When it comes to investing in property, it is generally a huge decision to be made by Australian households. What are the important factors that a person needs to consider before going ahead with such purchase?

* Costs: on-going costs such as council rates, maintenance costs agency costs etc Taxes, such as CGT, GST, stamp duty Price of the property * Possibility of capital growth * Address: social network advantages * Macroeconomic circumstances: interest rate, property price etc * Income level: liquidity

2) What are the advantages and disadvantages of investing in property? Despite economic downturn in recent periods, there are various incentives provided by
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3) Residents are taxed at a different tax rate to non-residents. Discuss the main difference between residents and non-residents and tests that are being applied to distinguish between those two categories.

* Non-residencee’s marginal income tax rate is basically higher than residents’, both of them are taxed progressively. * Two criteria to pay residency tax-rate: 1). Continue physical present in australia. 2). Minimum period for tax residency will be 180 days. * Australian residents are liable for tax on their worldwide income. While Non-residents are liable for their income with an Australian source. * Foreign residents don’t need to pay Medicare levy.

4) Explain the differences between statutory and ordinary income. Give examples of either category in your answer.

* Ordinary income---things that would ordinarily appear to anyone as being a taxable receipt in the hands of the taxpayer. Examples of ordinary income include salary&wages, bank interests, fees for services, commission etc. Statutory income means income that is assessable because the Acts describe it as being assessable. Examples of statutory income include capital gain, Fringe benefit, superannuation, employer termination etc.

5) Distinguish between income and capital and explain why such distinction is so important.

* Take stocks for example, the dividend or interest earned are recognized as ordinary

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