Taxation Law Assignment on Capital Gain Tax and Depreciation of Assets

TAX
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Contents
INTRODUCTION........................................................................................................... 3
Task 1......................................................................................................................... 3
Capital Gain Tax-..................................................................................................... 3
Capital gain.......................................................................................................... 3
Capital loss........................................................................................................... 3
Task 2......................................................................................................................... 6
Conclusion.................................................................................................................. 7
References................................................................................................................. 8
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INTRODUCTION
For the implementation of distinct taxes, there are numerous acts formed and these acts are
followed and according to the rules and provisions of this act, the taxes are levied. This
assignment majorly focuses on the Income Tax Acts which were formed in the year 1936 and
1997. The provisions of these acts are implemented while taking the solutions to the questions in
the report.
Task 1
Capital Gain Tax-
Capital gain is the difference between the cost of acquisition of an asset and the price at
which the asset is been transferred or disposed of. This gain that an assessee has earned is treated
as the income of the assessee in that financial year.
Capital loss- It is the difference in the price of sale and acquisition. The amount is treated as
loss if the sale price is less than the cost of acquisition. Losses are settled off from the account of
the income of same head. If there is no income in this head than this would be taken forward in
the upcoming financial years.
Taxes are attracted by the capital gains only and the losses do not attract the tax rather they
actually reduce the profits (Anon., 2019).
From the Income Tax assessments of the year 1936 and 1997, this assignment is solved.
The given question is given in distinct portions and the solution to each one is given section-
wise-
A. Jasmine is an ordinary resident of Australia and she is 65 years old. She was basically
born in the United Kingdom and now an Australian resident. She is on the stage of her
retirement and she has already planned that she wants to sell all his capital assets. All the
assets she was selling were of the nature of capital assets and the treatment for the
following is given.
In the year 1981, she purchased a house for the amount of $40,000. She possessed the
house since then and this $40,000 was the actual cost of acquisition of the house. Now in
this financial year she was planning to sell this house for an amount of $65,000.
There was a provision made in the law that if any of the assets which were acquired on or
before the date September 28, 1985 than these assets would not attract any of the capital
gain taxes over them and hence this gain will also not form part of the assessable income
of the assessee.
Keeping this provision in mind, this is concluded that there is no tax attracted by this sale
of Jasmine and hence she is not liable for any taxes over this income. (Anon., n.d.)
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