This article provides a detailed calculation and analysis of tax for investment property, shares, real estate property, partnership firm, trust and dividend income. It covers the provisions of ITAA 1997 and income tax assessment act 1936 and 1997. The article includes tables and calculations for better understanding.
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Running head: TAX Tax Name of the Student: Name of the University: Authors Note:
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1TAX Table of Contents Answer to Question 1.................................................................................................................1 Answer to Question 2.................................................................................................................3 a).............................................................................................................................................3 c).............................................................................................................................................3 d)............................................................................................................................................4 e).............................................................................................................................................4
2TAX Answer to Question 1 As per the provisions of thesection 100-20 of the ITAA 1997the sale of the investment property, shares and the real estate property will all be considered as CGT events. As per the provisos of thesection 110-25(3) of ITAA 97the cost base of the asset should include the cost of acquisition and the cost of disposal. As per the provisions of the section110-25(4) of ITAA 97the cost incurredin respect of the renovation of the property should be added to the cost base of the property. The detailed calculation of the capital gains of the entity is being given out in the section 100-45 of the ITAA 97. Statement showing calculation of Capital gain ParticularsAmountAmount Real estate property$950,000.00 legal fees$4,500.00 real estate agent commission$45,000.00 Selling and distribution$2,500.00 Net capital proceeds$898,000.00 Cost of the property$350,000.00 legal fees$1,500.00 Stamp duty$9,500.00 cost of renovation$250,000.00 Cost base$611,000.00 Gross capital gain$287,000.00 Less: Discount @ 50%143500.00 Net capital gain$143,500.00 Loss on sales of investment property$180,000.00 Capital gain on sales of shares$225,000.00 Total Net capital gain$188,500.00
3TAX Answer to Question 2 a) as per thetaxation ruling 2005/7 under para 7the net income of the partenrshiop firm will not be containing the salary being paid to the partners. Calculation of Net Income ParticularAmount Profit of partnership$325,000.00 Wages of partner$150,000.00 Net Income$475,000.00 b) as per thesection 92(1) of the income tax assessment act 1936the income of the partners should be including the profits that have been earned by the partnership. Net income allocation to each partner ParticularsAmount Net Income$475,000.00 share proportion50% Net income allocated to partner$237,500.00 c) as per thesection 97(1) of the income tax assessment act 1997the income that is earned by the trust is taxable in the hands of the beneficiary. d) The assessable income must include the income from the trust and the normal rate of tax must be made applicable on it. e) Calculation of dividend
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4TAX ParticularsAmount Dividend received$135,000.00 Gross dividend$190,812.72 Section of dividend taxed$55,812.72 f) Calculation of Tax payable ParticularAmount Net Income from partnership$237,500.00 Dividend Income$135,000.00 Total Assessable income$372,500.00 Tax payable$140,857.00 Franking credit$55,812.72 Net Tax payable$85,044.28