CGT and Fringe Benefit Tax Consequences in Taxation Law

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

1TAXATION LAW
Table of Contents
Introduction:...............................................................................................................................2
Question 1:.................................................................................................................................2
Answer to question 2..................................................................................................................7
Answer to A:..............................................................................................................................7
Conclusion:................................................................................................................................9
Answer to 2 B:.........................................................................................................................10
References:...............................................................................................................................11

2TAXATION LAW
Introduction:
The existing study will take into the account the CGT and fringe benefit tax
consequences relating to the events occurred in the case study. The study will be considering
the net capital gains or capital loss for the current year ended 30 June. In the later parts the
report would cover the fringe benefit tax outcomes that arises out of the information
furnished in the report for the current income tax year ended 2018.
The wider concept of capital gains tax comprises of the comparison between the
capital proceeds and the cost base of the asset (Barkoczy, 2018). Capital gains or capital loss
is ascertained by subtracting the relevant cost base associated with the asset or other events
from the capital proceeds or the disposal of assets.
Question 1:
Selling of Vacant Land:
According to the Australian taxation office purchasing the vacant land by a taxpayer
for the personal use or for investment purpose, the vacant block of land is treated as capital
asset which will be considered for taxation upon the sale of land. The contract of sale of
vacant land was entered into by the taxpayer (Grange et al., 2014). The land was purchased
for $100,000 with additional $20,000 for land and water tax when the land was under the
ownership of the taxpayer.
The vacant land in the current case will be treated as capital asset which will attract
capital gains tax similar to other assets. The taxpayer under this situation should maintain the
records relating to the date of purchase of land and cost that were incurred in purchasing the
land (James, 2014). The taxpayer cannot claim an allowable deduction for council water,
rates or land tax but these cost will be added up in the property case base. On disposal the

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cost base of the asset will be subtracted to determine the net value of capital gains made from
such disposal.
Antique Bed:
As defined in “S-108 (1), ITAA 1997” collectables usually comprise of any rare folio,
manuscript, artwork, jewellery or any antique object or any interest or debts originating from
the above stated items (Jover-Ledesma, 2014). A taxpayer is required to disregard any capital
gains for asset that has the purchase value of $500 or less and hence it is exempted from the
CGT provisions of “S-118-10(1), ITAA 1997”.
In the current case, the evidences gained suggest that the antique bed that was held by
the taxpayer was stolen from the taxpayer’s residence. The taxpayer later learned that antique
bed did not formed the part of specified items in the insurance policy.
As per “S-104-20(1), ITAA 1997” a CGT event C1 happens to a taxpayer when an
asset is destroyed or damaged. It is noteworthy to denote that the timing of the CGT event is
essential in ascertaining the capital loss or capital gains (Kenny et al., 2018). The antique bed
in the current case was stolen from the residence of the taxpayer and the same was not in the
list of specified items. Therefore, the compensation that is received for the lost antique bed
resulted in CGT event C1.
Painting:
“Subdivision 108-C” deals with the personal use assets. A private use asset is
generally treated as non-collectable asset, kept by the taxpayer for their private enjoyment.
These assets are boats, furniture, electrical goods and the household items (McCouat, 2018).