Taxation Law and Implications for Selling a Business

TAXATION LAW ACC301

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
ISSUE..............................................................................................................................................1
LAWS..............................................................................................................................................2
APPLICATION...............................................................................................................................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
In taxation income taxes are the most significant form in Australia. Taxation is collected
by federal government by Australian Taxation Office (ATO). Tax law of Australia is created by
the statute, and primary source lies in the legislations. Cases are interpreted by legislations and
secondary source of taxation laws. Taxation helps to generate revenues and maintaining equality
among the people. Tax returns are prepared of the individuals for deducting the tax liability.
Taxation authority has given the guidelines regarding the tax liabilities, deductions, exemptions
and all the related matters (Tran-Nam, 2016). Report will provide about the knowledge about
the filing of tax returns. The consequences on the tax return on sale of business and available
deductions. It will provide an understanding about the relevant taxation provisions applicable to
the case. Report will be presented in ILAC format that is issue, laws, application and conclusion.
ISSUE
A business of car sales was operated by Mr Ben from 2007 March. The car yard was
purchased originally by Ben in 2006 November. Purchase was made of vacant land on which he
built car showroom with reception and an office. He started the business of selling car by
himself. Ben made up the yard, erected high fences with the lockable gate and put up the
signage. Ben was running business efficiently and was making good turnover, it had a turnover
of $ 940000 in 2018. After running the car business successfully know Ben wants to move away
from the car business and wants to move into partnership with Amy his wife in coffee shop. In
April, 2019 Ben accepted the offer from interested buyer an d sold the business for 14,10000
Australian dollars. Contracts for purchases were exchanged originally on May 5, 2019. Ben as a
part of contract also received amount of $ 50000 for not establishing any other car dealership
within area of 50 km for three years period. In the sale price of $ 14,10,000, car yard site was
paid $ 450000 , for cars in hand it paid $ 680,000, office equipments amounted for $ 10,000 and
balance of $ 270,000 for goodwill.
Amy and Ben own a home which was valuing at 1300,000 Australian dollars. They have
an investment property valuing $ 4,200,000 which consists of six apartments. Investment
property had a charge of loan having balance of $ 1,500,000. Share portfolio is also maintained
by Ben in his own name having $ 360,000 current market value. Lastly he is having current
balance of $ 440,000 in his superannuation funds. Ben is Australian resident paying tax and
filing income tax returns from years. This year Ben has sold the car business with goodwill and
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