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Assessment Task 2 TABLE OF CONTENTS Part 1 3 Facts of the case 5 Provisions and Regulations relating to capital gain

   

Added on  2020-04-01

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Assessment Task 2

TABLE OF CONTENTSPart 1..........................................................................................................................................3Facts of the case.....................................................................................................................3Provisions and Regulations relating to capital gain...............................................................3Conclusion..............................................................................................................................3Part 2..........................................................................................................................................5Facts of the case.....................................................................................................................5Provisions and Regulations....................................................................................................5Conclusion..............................................................................................................................5Part 3..........................................................................................................................................6Facts of the case.....................................................................................................................6Provisions and Regulations....................................................................................................6Conclusion..............................................................................................................................7Part 4..........................................................................................................................................7Facts of the case.....................................................................................................................7Provisions and Regulations....................................................................................................7Conclusion..............................................................................................................................8References..................................................................................................................................8Part 5..........................................................................................................................................8Facts of the case.....................................................................................................................8Provisions and Regulations....................................................................................................8Conclusion..............................................................................................................................9

PART 1Facts of the caseIn accordance with the information provided Eric has purchased the assets specified below inlast twelve months:ParticularAmount in $An antique vase2000An antique chair3000Home sound system12000Painting9000Share of listed company5000The above mention assets were sold by Eric last week in the following manner: antique vase:$3000; sound system $11000, painting for $1000; antique chair for $3000 and shares of thelisted company for $20000. Further net capital gain or loss is to be ascertained for abovetransactions.Provisions and Regulations relating to capital gainAccording to Alpanda and Zubairy (2016), holding period plays the significant role inascertaining the capital gain tax liability for an assessee. As per the provisions of Australiantaxation; in case an asset is held for more than the period of twelve months than discountingor indexation method is applied for ascertaining capital gain profit or loss on sale of the asset.However, in case the asset is held for a period of fewer than twelve months than other methodis applied for ascertaining capital gain or loss (AO, 2015). Computation of gain or loss inother method is ascertained by reducing purchase cost from selling price, and in case any lossarises than the same can be adjusted from a gain of other similar transactions.ConclusionIn the present case, as it has been specified that Eric has held assets for a period less thantwelve months; thus computation of capital gain will be done in accordance with othermethod. As per Arnold, Bateman, Ferguson and Raftery (2014), calculation of capital gain orloss will be performed in the following manner:Antique VaseGain = Selling price – acquisition cost

=$3000-$2000=$1000Antique ChairGain = Selling price – acquisition cost = $1000-$3000= - $2000Home sound systemGain = Selling price – acquisition cost = $11000-$12000= - $1000PaintingGain = Selling price – acquisition cost =$1000-$9000= - $8000Share of listed companyGain = Selling price – acquisition cost = $20000 -$5000= $15000Total capital gain = $1000+ ($2000) + ($1000) + ($8000) + $15000= $ 5000

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