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Taxation Assignment in Harvard Word Count

   

Added on  2019-09-25

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Taxation AssignmentCOVER PAGETitle of Paper:Taxation AssignmentReferencing Style: HarvardWord Count: 2000Date:01 June 20161

Taxation AssignmentContentsCapital gains tax case study:......................................................................................................3Fringe Benefits tax case study:..................................................................................................82

Taxation AssignmentCapital gains tax case study:FiguresMain residence and forfeiteddepositNot taxable due to main residence exemption andtaxation ruling (Refer point a)Painting $1,10,000 (Refer point b)Shares of a newly listedMining CompanyNIL (Refer point c)Luxury Motor CruiserNIL (Refer point d)Gross Capital Gain$1,10,000Carried forward Capital loss ofprevious years($10,000)Capital Gain$1,00,000- CGT Discount($50,000)Net Capital Gain of Mr. DaveSolomon$50,000(a)Capital gains tax liability for Mr. Dave Solomon regarding a two-storey houseThere will be no capital gains liability on account of sale of the house and forfeiture ofdeposit due to following reasons:Any capital gain/ loss emanating from disposal or sale of a Capital asset that is a dwelling/main residence or ownership interest in such house/dwelling will not be subject to Capitalgains tax as per Section 118-110 of the Income Tax Assessment Act, 1997 which governs theregulations with respect to main residence exemption. If a particular dwelling is a mainresidence of the tax payer, then any capital gains due to sale of such main residence is exemptfrom tax.[ CITATION ATO152 \l 16393 ]A dwelling is defined as anything that is mainly orwholly utilised for the purpose of residential accommodation. 3

Taxation AssignmentHence, the said house which has been utilised by Mr. Dave Solomon as a residence will beexempt from Capital gains tax as per Section 118-110 of ITAA, 1997. Treatment of Forfeited deposit: The taxation impact of forfeited deposit will be governedby the capital asset with respect to which the forfeited deposit has been received. Consideringthe facts of the case and the receipt of deposit in relation to the main residence, as pertaxation ruling 1999/19,[ CITATION aus01 \l 16393 ] the said forfeiture will not beconsidered as a CGT event due to following reasons:-As per Section 104-150 of the ITAA, 1997, if a deposit paid in view of a future expectedsale is forfeited by the said depositor and retained by the prospective seller, then it willamount to being a CGT event H1. [ CITATION Wol16 \l 16393 ]-Section 118-110 of ITAA, 1997 with respect to main residence exemption also will beapplicable with respect to forfeited deposit regarding the main residence exemption, thensuch capital gain/ loss will be disregarded.-The event of sale of capital asset has happened within 2 years of the act of forfeiture ofdeposit, hence, it could be said that it has happened within the continuum of event offorfeiture. (b)Painting by Pro HartAn asset is classified as “collectable” if the said asset is an jewellery, coin, artwork,postage stamp and such other articles which are utilised or set aside mainly for personaluse or enjoyment of the tax payer himself. Such assets are for personal consumption ofthe tax payer. The Capital gains or losses arising from sale of collectable which wereacquired for a cost of $500 or lower are altogether disregarded. Further, CGT Event A1with respect to disposal of an asset as per Section 104-10(1) of the ITAA, 1997 will bedeemed to be held as the painting of Pro Hart held by Mr. Dave Solomon was sold at anauction on 31 May. 4

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