Distinguish between personal income and personal disposable income
Answers
ANSWER:
The main difference or the distinguishing factor between personal income and personal disposable income is the tax payment.
EXPLANATION:
Personal Disposable Income (PDI) and Personal Income (PI) are 2 terms which must be differentiated correctly as they are utilised interchangeably in spite of their differences.
PDI is the amount or quantum of money which individuals have available for saving and spending after income tax to the govt. have been paid and accounted for.
PI, also called ‘before-tax income’, is the total yearly gross income of a person from all sources of income, such as wages and salaries wages, dividends and interest on investments, employer’s contribution towards retirement funds and pension plans, rental properties, capital gains, among others.