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Calculating Fringe Benefits and Taxes

   

Added on  2019-09-23

14 Pages2517 Words193 Views
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HI6028_Taxation_Assignment[Type the document subtitle]Student[Pick the date]
Calculating Fringe Benefits and Taxes_1

ContentsCase study 1: Capital Gain Taxation..........................................................................................................2Case study 2: Fringe Benefits.......................................................................................................................8References.................................................................................................................................................131
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Case study 1: Capital Gain TaxationFacts of the case: Fred is a resident assessee Assessee has sold Holiday home. That means, the assessee has a Main residencewhere he resides Holiday home is located in Blue Mountain Agreement to sale happened in August 2015Actual sales consideration received in February 2016Sale consideration $8,00,000Cost incurred for selling the house property $ 1100 (legal fees inclusive of Goodsand Service Tax) plus $9900 (Sale agent’s commission inclusive of Goods andService Tax)Year of Purchase 1987. Month MarchCost of purchasing the House property $100000Stamp duty paid on purchase of the said property $2000 (2% of consideration)Legal fees paid $2000Fred has other Capital Loss of $10000The capital loss has arose due to Sale of Shares Assumptions: The house property is located within the Taxation Authorities 2
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Assessment year as per the Revenue authorities begin from 1st July and ends30th June Assessee resides in his Main Residence which is different than Holiday home.Assessee has not made any investment further out of the sales consideration forthe purpose of Tax savingAnswerPoint of Taxation – August 2015. As per the Income Tax Assessment Act 1937, thepoint of taxation in case of Sale of real estate properties other than those which are heldfor personal use is the time when the contract agreement is registered with localauthorities (Smith, 2004). It becomes crucial for the assessee Fred to identify the point of taxation of a Capital Gaintaxation event. It has implication in calculation of Tax Liability. In this case, the contract for sale was registered in August 2015. And hence Capital GainTaxation liability starts from Assessment Year 2016-17. i.e. Financial year 2015-16.However, Liability shall be paid in the year, settlement happens. In this case, thesettlement is done in February 2016 and hence the payment of Capital Gain Tax (if any)shall be subject to payment in AY 16-17 only. 3
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