Taxation Law Australia Question Answer 2022

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

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Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................6
References:...............................................................................................................................10

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Answer to question 1:
Requirement A: Sale of main house:
There is a limitation that is imposed by “sec 100.25 (1), ITA Act 1997” on the assets
where only part 3 is applicable to the assets that are purchased on or following 20 September
1985. The taxpayers must denote that taxes on capital gains is applied on the actual or the
realised gains. Besides this, the capital gains which is realised by the taxpayers are held as
statutory income in “sec 6.10” and counted into the taxpayer’s taxable earnings under “s
102.5(1), ITA Act 1997” (Burgess 2015). The capital gains which is earned by the taxpayer is
contained within computation of assessable tax liability of taxpayer while the capital loss is
only allowed for offset when a capital gain is reported by the taxpayer. Assets which is
purchased before the 20 sept 1985 is excluded for CGT purpose.
The case here is concerned with the sale of assets during the year by Jasmine. As
understood Jasmine has sold the main dwelling that she purchased for $40,000 in 1981. In the
present year the main home of Jasmine upon the sale fetched $650,000. Now it can be stated
that the house was acquired prior to 20/9/1985 (Dean 2015). As a result, the house will be
classified as the pre-CGT asset. In addition to this, the capital gains which Jasmine produced
from disposing the main home will not be exempted for being a pre-CGT asset.
Requirement B: Sale of Car
CGT events are mentioned as the different form of transactions or events which may
contribute to capital gains or loss. The “CGT event A1” under “s 104.10 ITA Act 1997”
means selling of CGT asset. This event is applied on CGT assets purchased on or succeeding
19/9/85. For the application of CGT event CGT asset needs to be sold to another entity. As
notified in “s.108.20, ITA Act 97” there are assets named personal use asset (PUA’s) which
is under the ownership of taxpayer for private satisfaction purpose (Mahar 2016). The list of

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assets under this heads includes the boats, furniture, motor vehicle and domestic items.
Noting “sec.108.20 (1)” capital loss happening from this disposal is not accounted for tax
purpose.
The situation of Jasmine further notifies that she held the ownership of car that she
had bought for $31,000 in 2011. The car is the PUA’s with “s.108.20” because starting from
the day of purchase to the day of sale it was used by Jasmine for her private purpose. When
Jasmine was selling the car, it had the total worth of $10,000 (Mavropoulos 2017). As
understood a capital loss has been suffered in this situation. Noting “sec.108.20 (1)” capital
loss happening from the disposal of personal car of Jasmine is disregarded for tax purpose.
Requirement C: Sale of business
As the means of providing assistance to the small business there are some basic
conditions that needs to be fulfilled to give relief from the capital gains (Barros, Teo and
Hinchliffe 2016). Any kind of capital gains realised from selling the business can be lowered
by numerous concessions that are available under “Div 152, ITA Act 1997”. The concession
available under “Div 152, ITA Act 1997” are given below;
a. 15-year exemption from the full amount of capital gains obtained from disposing a
CGT asset given the asset was owned by taxpayer for 15 years and the taxpayer is 55
years older or more.