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Questions of Taxation Law Assignment

   

Added on  2020-10-05

9 Pages2241 Words439 Views
QuestionsofTaxation Law

Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................3Question 1...................................................................................................................................3Question 2 ..................................................................................................................................4Question 3...................................................................................................................................6CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................7

INTRODUCTIONA tax is charged by the government on the income earned by an individual, company ortrust, also the value of a property or gift is taxable. Taxation law is body of rules, policies andlegal provisions under which a taxpayer has to pay a certain amount calculated on transfer value,income etc. It is wider and inclusive in nature (Oats, L. (Ed.)., 2012). The scope is also widewhich covers many other areas. It is a source of revenue which is bifurcated into direct andindirect income. The report has been drawn upon taxation law of Australia by solving questionspertaining to different heads of the tax for better understanding of every area. MAIN BODYQuestion 1This question explains capital gain. Capital gain refers to any profit or gain which isearned by selling a capital asset. The capital assets are divided into two categories long term andshort term. When an item is held for less than 36 months from the date of acquisition, then it istreated as short on the contrary, if the asset is held for 36 or more months, then it will be called along term asset. The treatment is different in both the cases. Furthermore, all the assets have beencategorised into different categories such as depreciable, exempted etc. Also, there are threedifferent methods for calculating the amount of capital gain or loss (Woellner, R., and et. al.,2014). If sale price is higher than cost, then it will be a gain whereas if cost exceeds sale price, itwill be considered as loss. Capital loss can be carried forward and set off as per the provisions.Stocks, bonds or real estate are termed as capital assets. When selling price of an item is reducedfrom cost price, then positive amount is treated as gain and negative is considered as loss. 1. An antique impressionism painting Helen's father bought in February 1985 for $4,000.Helen sold the painting on 1st December 2018 for $12,000. Answer- Every antique item whose value exceeds $500 becomes taxable. However, suchassets if bought prior to 20th September 1985 and having a value of more than $500 is exemptunder section 104 to 110(5) ITAA, 1997. Hence, the profit of $8,000 ($12,000 - $4000) will notbe taxed.2. Helen sold her historical sculpture on 1st January 2018 for $6,000. She has purchasedthe piece on December 1993 for $5,500.

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