Tax Theory, Practices and Laws Assignment on GST and Capital Gain Tax

HI6028
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Table of Contents
Introduction...................................................................................................................3
Task1.........................................................................................................................3
Introduction................................................................................................................3
GOODS AND SERVICE TAX...................................................................................3
Reverse Charge Mechanism.................................................................................3
Input Tax Credit......................................................................................................3
Reference of the law..............................................................................................4
Task 2...........................................................................................................................4
Capital Gain Tax........................................................................................................4
Cost of Acquisition.................................................................................................5
Collectibles.............................................................................................................5
Section 1................................................................................................................5
Section 2................................................................................................................6
Section 3................................................................................................................7
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Introduction
This is the report prepared over the two questions given in the assignment and these
questions are related with two different taxes i.e. GST and Capital Gain Tax
respectively. In the next part of the report, both the tasks are been explained along
with the tax and law implications according to the situation explained in the question.
Task1
Introduction
Most of the nations promote the idea of “One Nation- One Tax” and GST is the tax
which promotes this saying. Whenever there is a transaction either of goods or
services or both then it attracts GST. (GST)
GOODS AND SERVICE TAX
The Australian GST is been levied on most of the goods and services. The rate of
tax is not fixed but most of the goods and services attract the rate of 10%. Value of
the commodity is increased by imposing the tax over it this makes the burden over
the consumer and hence increasing the value of the commodity. This is a tax which
is paid by the consumer who is actually using the commodity. This is the tax which is
implemented by the government so that the commodity can have a complete value.
(When to charge GST (and when not to))
This is the tax which has certain distinct rules, provisions, and schemes and there
are distinctly different ways to levy this tax over certain distinct commodities and
services. There are a number of commodities and a service which does not even
attract the tax and are exempt from the GST tax.
There is a certain limit specified and any of the people or firm which crosses this limit
has to get registered under this tax and has to follow all the rules, provisions and
schemes specified under this tax.
Reverse Charge Mechanism
This is a charge in which the burden of the tax is to borne by the person who is
paying the fees as in this case a list is been specified which gives the burden to the
firm or the person who is registered under this tax as if they will focus on the
collection from the small taxpayers than it would become difficult for them collect
them and hence decreasing the revenue of the Australian Government.
This charge specifies a particular list giving the services in which the company or
firm which is receiving the services are liable for the payment of the GST. If they are
not the actual consumers of these goods or services then they will be eligible to
claim the credit over the tax they have paid. (When to charge GST (and when not
to))
Input Tax Credit
This theory means that the credit would be availed on the taxes which are paid by
the people who are the part of the supply chain. A chain involves a number of people
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