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(solved) Taxation Law Assignment Doc

   

Added on  2020-03-28

12 Pages2581 Words50 Views
Running head: TAXATION LAWTaxation Theory, Practice & Law

1TAXATION LAWTable of ContentsQuestion 1..................................................................................................................................2Question 2..................................................................................................................................4Question 3..................................................................................................................................6Question 4..................................................................................................................................7Question 5..................................................................................................................................8Reference..................................................................................................................................10

2TAXATION LAWQuestion 1Issue in Question Eric sold few assets acquired by him over the last 12 months period. Thedetermination of capital gains in relation to these assets is the issue to be addressed in thisquestion. Different provisions of capital gains tax apply in relation to different category ofassets. Further, the set off of capital gains losses and carry forward of the losses is alsodifferent depending upon the type of capital asset. Thus, the issue of set off capital losses andcarry forward of the losses on the assets sold by Eric is also involved in the given case. Applicable LawVarious provisions of income tax assessment act 1997 and new business tax system(capital gains tax) 1999 are applicable in the given case. The income tax assessment act 1997contains basic provisions related to inclusions and exclusions to and from the taxable income.The provisions of new business tax system (capital gains tax) 1999 contains specificguidelines on the computation of capital gains tax (CCH Australia Limited, 2011). Analysis of CaseIn the given case, assets held by Eric fall into three types of categories such ascollectables, personal use, and ordinary business asset. The assets namely painting, antiquechair and antique vase are collectables while the asset such as home sound system is personaluse. The shares in a listed company are ordinary business assets. As per the provisions ofsection 100-25 (1), the personal use assets below the value of $10,000 are exempt fromcapital gains tax. Further, the collectables are also exempt up to the value of $500 (ATO.2017). Further, the losses on the personal use assets and collectables are only allowed to beset off against the capital gains under the respective categories. This implies that the losses on

3TAXATION LAWthe personal use asset or the collectables are allowed for set off against the capital gains onthe ordinary business assets. Keeping in view the above provisions, the computation ofcapital gains and losses in relation to different assets held by Eric is given below:Antique VaseSales proceeds3,000.00 Less: cost of purchase(2,000.00)Capital gains1,000.00 Antique chairSales proceeds1,000.00 Less: cost of purchase(3,000.00)Capital loss(2,000.00)PaintingSales proceeds1,000.00 Less: cost of purchase(9,000.00)Capital loss(8,000.00)Home sound systemSales proceeds11,000.00 Less: cost of purchase(12,000.00)Capital loss(1,000.00)Shares in listed companySales proceeds20,000.00 Less: cost of purchase(5,000.00)Capital gains15,000.00 It could be observed that the loss of the personal use asset that is home sound system

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