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HI6028 Taxation Theory, Practice & Law T2 2017 Individual Assignment Question 1: Calculating the net capital loss or gain from the bought and sold by Eric

   

Added on  2020-04-07

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HI6028 Taxation Theory, Practice & LawT2 2017 Individual Assignment

TABLE OF CONTENTSQuestion 1..................................................................................................................................3Question 2..................................................................................................................................3Question 3..................................................................................................................................3Question 4..................................................................................................................................4Question 5..................................................................................................................................4References..................................................................................................................................5

QUESTION 1Issue Calculating the net capital loss or gain from the assets bought and sold byEric.Anantiquevase$2,000Anantiquechair$3,000Apainting$9,000Ahomesoundsystem$12,000 Shares in a listed company$5,000 The assets sold were as follows- antiquevase-$3,000 antique chair- $1,000painting- $1,000 sound system- $11,000 shares- $20,000RegulatoryprovisionsFor the purpose of determining capital gain or loss, as per the AustralianTax provisions, the holding period of an asset is the critical point to beconsidered. According to the provisions stated thereto, if the asset holdingperiod is more than a year, indexation or discounting method is applied forthis purpose of determining capital loss or gain (AO, 2015). On the otherhand, if the defined period is less than a year then the taxable amount iscalculated as-Sales price - purchase priceThe loss arising from one transaction is compensated by the other. Applicability of citedprovisions inthe case In the present scenario, the assets have been held by Eric for less thantwelve months, and due to the same reason, the other method in which gainis ascertained through reducing purchase price from selling price will beapplied. The capital gain or capital will be calculated in the followingmanner:Capital Gain (selling price- purchasing price)Capital Loss(selling price- purchasing price)AssetAmount in$AssetAmount in$Shares in a listedcompany$15000Antique chair$2000($20000-$5000)($1000-$3000)Antique vase$1000Painting$8000($3000-$2000)($1000-$9000)Home sound system$1000($11000-$12000)Total capital gain$16000Total Capital loss$11000ConclusionIt can be concluded from above calculation that in present year net capital

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