Capital Gains Tax and Capital Allowance in Taxation Law

TAXATION LAW

Answer 1.
Capital gains tax
The capital gain about the family home
Capital gain can be termed as the difference between the purchase and selling price of an asset
after deducting all the relevant and expenses that have been made for the asset before selling it.
Capital gains tax is generally levied on the amount that has been incurred as capital gain from the
sale of assets. Any asset that exceeds the value of $10,000 and is owned by the organization of
the individual is liable for capital gains tax. It should also be noted that assets that have been
bought before 20th September 1985 are excluded from the tax and provision holds that have
been mentioned above. In this particular scenario, it has been observed that Jasmine is an
Australian resident and is residing in a property which is going to be sold by her. Hence, we must
judge if the property was used for personal use or revenue generation. Jasmine was and citizen of
the United Kingdom and she had no resident in Australia earlier. This resident was used by her to
dwell in and the address of the resident was also stated to be her mail address. Hence it can be
stated that the property was used by her for personal purposes and further it is eligible for
exemption from capital gains tax because it was her main residence. The purchase price of the
property was stated to be $40,000 and the selling price was $650000. If under any condition it
was observed that she was not eligible for exemption of the capital gains tax, then she will not be
provided with a discount of 50% on the profit that has been made by the sale of assets. If there
was no exemption of tax, then she would have been liable to pay capital gains tax on $610000
(650000-40000). Also, it should be noted that the property was bought before the year 1985
which exempts it from the capital gains tax.
The capital gain or loss made from the car
Many types of assets exempt from the ambit of capital gains tax. Assets like mean residence,
cars, motorcycles, and other depreciable assets and any other said that have been acquired before
20th September 1985 are exempt from the capital gains tax. Hence, it can be stated that the car
owned by Jasmine was excluded from the ambit of capital gains tax. In this particular scenario, it

has been observed that a capital loss of $21,000 (31000-10000) will be observed after making the
sale of the car. Therefore it can also be stated that the sale of the asset will not impact the total
assessable value of Jasmine while calculating capital gains. As per the provisions, it has been
mentioned that loss on a capital asset can be only observed if capital gains are also treated. The
losses can generally be treated or adjusted with the help of the capital gains. Losses that have
been incurred on long term capital assets like property or gold that have been held for more than
36 months, can be adjusted with the help of long term capital gains. Also, the loss incurred on
short term capital assets can be treated with the help of short term capital gains. The loss or gains
can come from any of the capital assets accept from the shares as per the provisions.
The capital gain in relation to the sale of the business
In this particular scenario, it has been observed that Jasmine commenced a small cleaning
business which was going to be sold by her. She found a buyer of the business for $125,000. It is
observed that we get a carrying amount which is deducted the value of assets sold on the capital
gain on the sale of a business. A discount of 50% is provided to the individuals in this case.
Jasmine is 65 years old and is eligible for concessions of the capital gains tax. An individual
should be of 55 years or more to gain the exemption. Also as she started the business just after
entering Australia, it can be stated that her business was running for more than 15 years. These
exemptions will be made available to her because of the retirement she is taking and further no
capital gain will be charged on the profit that has been made on the sale of the business (Seal,
2012). The total amount received by her was $125,000 which consisted of $65,000 for assets and
$60,000 as goodwill. A total of $75,000 was observed as expenses because of which the total
taxable amount will be considered as $50,000 (125000-75000). After availing the capital gain
discount the amount will be for the reduced to $25,000 (50% of $50000).
The capital gain in relation to selling the furniture
It was observed that the furniture used by her was considered to be as personal assets of an
individual and capital gains tax was not applicable on any of the personal assets that have been
purchased at a value of $10000 or less. In this case, it has been observed that Jasmine has
purchased the furniture for less than $2000 and also their use has only been made for personal
purposes. Therefore all the furniture will be exempted from capital gains tax. The selling price of