Taxation Law Answer 2022

TAXATION LAW

Taxation
Answer – 1 Capital gains tax
a. Capital gain in respect of family home
It has been observed that Australian residents can claim exemption of tax on residents
if and only if the property is owned by them. Therefore it can be stated that Jasmine
can claim exemption of tax for residence. It has been verified that Jasmine is a citizen
of the United Kingdom and have never used the property for any kind of commercial
purpose which can help her to earn a profit using it. The property owned by her was
registered in her name and was used as a residence and also it was observed that all
her emails posted at this address. Therefore all the requirements for exemption of the
tax have been met by her (Australian government, 2019). The cost price of the property
owned by her was $40,000 which is now being sold for $650000. The capital gain
earned on this transaction will be calculated on the total profit made on the sale which
amounts to $610,000. As she is eligible for the exemption of capital gains tax, the profit
earned by her will not be reduced by 50%. It was observed that the property was
bought in the year 1981 and according to the property law, any land all property which
have been purchased before the year 1985 will have an exemption from the capital
gains tax (Cordato, 2017).
Heavy taxes are applied by countries like Australia on capital gains and are termed as
capital gains tax. Assets that are having a net value of $10,000 are needed to be taxed
for capital gains. Hence, as it was observed that Jasmine was an Australian resident
with the property being used as a residential home for her, she will be exempted from
paying the capital gains tax on the sale of her residential property (Black, 2019).
b. The capital gain or loss made by the sale of the car
All the assets like motorcycles, car, main residence, depreciable assets, etc which
have been purchased before the date 20th September 1985 are observed to be
exempted from the capital gains tax. It was observed that the total capital loss of
$21000 was to be paid. It has been observed that the total tax liability will not be
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Taxation
registered as the capital gain was also not being recorded (KMPG, 2019). Hence, there
will be no changes made in the value of the capital gains. Generally, it is observed that
capital loss is adjusted with capital gains. The long term capital gains are used to
adjust the capital loss that has been incurred by the individuals on the sale of assets.
The capital loss earning from the sale of the assets can also be adjusted with the help
of short term capital gains provided all the provisions should include any type of
capital assets except shares.
c. The capital gain on the sale of the business
Total discount of 50% can be claimed as capital gains that have been earned by selling
the business. This discount can only be claimed by the organizations and not by
individuals. The age of an individual should be 55 years if he wants to claim these
exemptions. Hence, Jasmine is eligible for this exemption because her age was 65
years at the time of sale of the business (Mursgruv, 2019). All that can be clearly stated
that the business was established a lot before 15 years ago because she was on the
verge of retirement and have started the business just after entering Australia and
settling there. The total value of tangible and intangible assets amounted to $125000.
The total value of the capital gains tax can be reduced from the final consideration of
the value of assets. A total of $50000 was evaluated as capital gains tax. A 50%
discount can be availed by air as an exemption which will turn the amount to $25,000.
d. The capital gain on selling the furniture
All the assets that are used by an individual for personal purposes are termed as
personal assets. Also, it has been stated that any personal asset which is having a cost
value of less than $1000 will be exempted from capital gains tax. Therefore the
furniture purchased by Jasmine will be exempted because all results under the
exemption limit and also the assets were used for personal use only. Hence an
exemption can be claimed on the acquisition value of the sale of the furniture
(Nethercott, Richardson & Devos, 2013). The purchase value of the furniture was $2,000
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