Capital Gains Tax and Depreciation of Assets under Income Tax Assessment Act, 1997

ASSIGNMENT
HA3042
TAXATION LAW
SUBMITTED BY:

Table of Contents
Introduction................................................................................................................ 3
Solution 1................................................................................................................... 3
Solution 2................................................................................................................... 5
Conclusion.................................................................................................................. 7
References................................................................................................................. 7
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Introduction
The Income Tax act of the year 1936 and 1997 states that the capital gains, as well as the capital
losses, occurs when the assessee disposes his assets that it when he makes the sale of the asset he
acquired. Few instances to understand the capital assets are as follows- machinery, property,
buildings, shares and many more.
A capital gain or loss is the amount that is the difference between the cost at which the asset was
acquired and the amount at which the asset is disposed of by the assessee in the form of transfer
or sale. If the price of sale or transfer is higher than the cost of acquisition than it is a capital gain
but f the sale price is less than the cost of the acquisition of the asset paid by the assessee than
there occur capital losses.
Taking all the provision of the Income Tax act of the year 1936 and the year 1997, the below
mentioned questions are solved. The other reference to these questions is taken from the book on
Principles of Taxation laws, 2019.
Solution 1
This answer contains further sub-portions and they all are as follows:
1. With the information provided by the question, it can be taken as Jasmine who is an
Australian resident and is presently 65 years old. She took birth in the United Kingdom
and she is presently planning at the retirement time to sell all her capital assets which she
owned. She purchased a house in the year 1981 and the cost of the house at that time was
$40,000. Now she is planning to sell the house at the price of $65,000.
The provision of the ITA act states that all the assets which are purchased on and before
the date 28 September of the year 1985 does not attract any of the provisions of capital
tax and hence are not liable for the tax payment.
There are a number of assets which are specified by the act which does not attract the
provisions of the capital taxes they are car, furniture, and houses.
The Income Tax Assessment act of Australia also states that if a person is a resident of
the country Australia and he or she is planning to make a sale of any of the assets
anywhere around the world than the assessee is completely liable to pay the tax in
Australia on the gain that he has incurred on the sale of capital asset.
Keeping in mind all the provisions of the ITA act, in the mentioned case of Jasmine- she
has a house which she purchased before 28 September 1985 and hence this is the reason
that there is no capital tax attracted by the capital asset and hence no tax is to be paid.
(office, What is a capital gains tax asset?)
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