Question Answer on Taxation Law 2022

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

TAXATION LAW1
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................6
References:...............................................................................................................................10

TAXATION LAW2
Answer to question 1:
Answer A:
A receipt received by the taxpayer regarding the sale of capital asset is known as
capital. Before 20 September 1985, the capital receipts were considered as non-taxable or tax
free until and unless the gains are derived from either from the disposal of asset acquired for
profit deriving purpose or a profit-deriving undertaking (Gordon 2017). Any assets purchased
before that date is exempted from capital gains and only real capital gains are considered
taxable following that date. The capital gains or loss that takes place to the house in which the
taxpayer is living is disregarded on the basis of the conditions that;
a. The taxpayer is an individual
b. The house was considered as the main dwelling all through the ownership period
c. The dwelling ownership was not passed to taxpayer as the beneficiary of the deceased
estate.
Jasmine being the Australian occupant is moving to UK and she is selling all her
Australian assets. She sells her home that has been her main dwelling from 1981. The home
was purchased by paying $40,000 and presently it was sold for $650,000. As it can be seen
that the house is her main dwelling and the capital gains that is made by her will be exempted
since the property is the pre-CGT asset (Bain and Boccabella 2019). She bought the house
prior to the introduction of CGT scheme and no tax is payable in this regard Jasmine.
Answer B:
As per the “sec 108-5, ITAA 97”, CGT asset comprises of any form of property
whether tangible or intangible. There are certain kinds of property that are dealt in special
manner. CGT is caused under “sec 104, ITAA 1997” on the occurrence of CGT event

TAXATION LAW3
(Coates 2015). The main CGT event involves the “CGT event A1” which includes the
disposal of asset.
A personal use asset (PUA) is referred under “sec 108-20, ITAA 97” as those CGT
asset excluding the collectable which is kept for private usage and fun of the taxpayer (Lam
and Whitney 2016). Signifying “sec 108.20(1), ITAA 1997” capital loss instigating from the
sale of private usage asset is simply ignored notwithstanding of the acquisition price paid.
As Jasmine is leaving Australia she owned a car in 2011 that was purchased by her for
$31,000 and during the time of sale the worth of the car stood $10,000. Under “sec 108-5,
ITAA 1997”, car is a CGT asset. Additionally, it must be classified as PUA’s under “sec 108-
20, ITAA 97” because Jasmine used the car for her own private purpose only (Villios 2014).
A “CGT event A1” within “sec 104-10, ITAA 1997” is triggered once the car was sold by
Jasmine. Upon selling the car a capital loss has happened for Jasmine. Therefore, under “sec
108.20(1), ITAA 1997” the capital loss should be ignored by Jasmine.
Answer C:
Small business CGT concessions under “Div 152 ITAA 1997”, provides the small
entities with the four types of concessions from CGT at the time of disposing the business
assets (Friend 2014). The concessions include;