Taxation Law Assignment

Running head: TAXATION LAW ASSIGNMENT
Taxation Law Assignment
Name of the Student
Name of the University
Author Note

TAXATION LAW ASSIGNMENT1
Table of Contents
Answer to Question 1...................................................................................................................2
Answer to Question 2...................................................................................................................3
References....................................................................................................................................6

TAXATION LAW ASSIGNMENT2
Answer to Question 1
Issue
The case is related to an Australian resident called Jasmine. She was born in the
UK and is aged 65 years. She has conducted her business as a cleaner is now planning
to quit the business. She will retire from the same by selling off all her Australian assets
and by moving back to the UK. Tax advice is to be provided to her on the sale of the
assets and the applicability of the capital gains tax on the following transactions:
A. In the year 1981, Jasmine purchased her main residence when its value was
$400000. In the present day, her house has been valued at $650000. According
to ATO’s rules, the main residence of a person shall not be charged under capital
gains tax. Main residence means the home in which a particular individual has
resided in for the majority of their Australian residence except when forced by
circumstances. The residence will be deemed to be a main residence only if the
person uses it for living there and not for any business or trade purposes.
Jasmine has lived in this particular home ever since she purchased it. Hence, the
money earned on selling off the home, $650000, should not be charged under
the tax related to capital gains (Ato.gov.au 2019).
B. As suggested by the ATO, the sale of a car or a motor vehicle has to satisfy
certain conditions to be able to be not charged under the CGT. These conditions
include that it should not have the ability to transport more than 9 people in one
instance and it is also incapable of carrying a load of more than one tonne. In
case both these case conditions are met, then the particular vehicle is not liable
to be charged under CGT. In 2011, Jasmine purchased the car by paying
$31000. In the present day, this vehicle’s value is $10000. In usual conditions, a
car meets the requirements of the ATO. Hence, if Jasmine successfully proves
the required conditions to the tax authorities, she is not liable to pay tax on the
$10000. If not, she has to pay tax on the money received by selling off the asset
(Ato.gov.au 2019).
C. There are four types of concessions made available to the small business
owners on the sale of their business assets by the Australian government
(Business.gov.au. 2019). These are to make sure that the people who are retiring
after the sale of an asset do not pay additional taxes. The first concession is for a
person whose age is beyond 55 years. If the amount received for the transfer of
the business assets is less than $500000, then the person is not required to pay
CGT tax. The proceeds may either be taken in cash or contributed to a
superannuation fund. However, if the person is aged under 55 years, then the
amount has to be compulsorily contributed to a notified superannuation fund. The
other concession available to people who have been the owners of a small
business for at least 15 years. In these people’s case, the sale proceeds will be
allowed as an exemption under the 15-year exemption. The next exemption is
the small business 50% active asset reduction. This exemption allows the people
to reduce 50% of their total capital gains. The remaining capital gains can be
transferred to the superannuation fund. The final exemption is the rollover relief
which is available to a small business which is acquiring a replacement asset
with the money earned from the sale of old assets. In Jasmine’s small business,