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Application of Taxation Law in Australia

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Added on  2021-02-21

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According to Australian taxation, generally main residenceis exempted from the CGT but for availing the exemption, it is necessary that an individual must be having a dwelling on its property and it must be used for the purpose of living because for vacant land exemptions are not entitled (Martin and Connor, 2017). In order to claim the exemption on the main residence, an individual must be an Australian resident and not the foreign resident because at the time when the event regarding capital gain tax happens to an individual'

Application of Taxation Law in Australia

   Added on 2021-02-21

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TAXATION LAW
Application of Taxation Law in Australia_1
TABLE OF CONTENTSQUESTION 1...................................................................................................................................1a....................................................................................................................................................1b....................................................................................................................................................1c....................................................................................................................................................2d....................................................................................................................................................2e....................................................................................................................................................3QUESTION 2...................................................................................................................................3Issue.............................................................................................................................................3Rules............................................................................................................................................3Application...................................................................................................................................4Conclusions..................................................................................................................................5REFERENCES................................................................................................................................6
Application of Taxation Law in Australia_2
QUESTION 1a.According to Australian taxation, generally main residence is exempted from the CGTbut for availing the exemption, it is necessary that an individual must be having a dwelling on itsproperty and it must be used for the purpose of living because for vacant land exemptions are notentitled (Martin and Connor, 2017). In order to claim the exemption on the main residence, anindividual must be an Australian resident and not the foreign resident because at the time whenthe event regarding capital gain tax happens to an individual's residential property withinAustralia then he or she might not be entitled with any rights relating to claiming the exemptionfor his or her main residence. In accordance with the Australian taxation law, the exemption on the family home arebased on more than one factor and the weight that is been assigned to each factor varies based onthe individual circumstances (Blakelock, and King, 2017). An assessee is eligible for availingfull amount of the exemption on its main residence in case dwelling must be a home of owner,partner and the other dependants for an entire period for which he had owned it. Secondly, itmust not be used for producing an assessable income and lastly, it must cover land equated totwo hectares and less. Thus, as per the provisions, Jasmine could enjoy full exemption on sale of her main residencebecause she is the owner and an Australian resident. b.As per the guidelines provided by Australian taxation office car purchased by anindividual is exempt from capital gain tax on its sale. The car in the laws is defined which ishaving load of less than 1 tonne and does not carry more than nine passengers. As per the rulesprovided in law if an individual sells a car for price that is less than the price at which itpurchased it than the difference is considered as capital loss. All personal vehicles are consideredas capital assets by Internal Revenue Service. Where the individual is selling car at price morethan its original cost than it will be entitled to capital gain tax (Steyn and et.al., 2018). Selling acar at profits is considered as capital gain by the IRS. Therefore it is required to be reported inthe tax returns of the individual.Capital gain tax is calculated after considering the cost of improvements that were madeto car to the original price of purchase. So Jasmine would not be required to pay the tax on the1
Application of Taxation Law in Australia_3

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