Taxation Law Assignment Capital Gains Tax

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Added on 2020-04-07

Taxation Law Assignment Capital Gains Tax

Added on 2020-04-07

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TAXATION

TaxationAnswer to 1Eric has procured etc various assets like collectibles, personal use assets, in the last year and because of appropriate information in the question, it is assumed that such assets are not held more than a year. As a result, the indexation advantage cannot be availed by Eric owing to such holding period and when the sale value of such assets exceed their acquisition cost, they become liable for capital gains tax (ATO, 2017).The reason behind the purchase of personal assets can be attributed to the fact that these facilitateself-use and enjoyment. Furthermore, if the procurement expense of these assets is more than $10000, then the capital gain tax shall incur on the sale of such assets. Eric has purchased a homesound system for $12000 in the given case. In addition, collectibles have been purchased for personal benefit as well and if their procurement expense is more than $500, then taxability of capital gain tax must incur upon the same (ATO, 2017). Eric has purchased collectibles like painting, an antique vase, and antique chair respectively. It can also be witnessed from the case that he has purchased some shares in a listed company that pursues a procurement expense of $5000. For computation of capital gain, the sales proceeds must be deducted from the procurement cost of the assetsList of assetsacquired by EricSale considerationProcurementexpense of suchassetsNet capital loss orgainAntique Chair$3,000$1000$2000 LossAntique Vase$3000$2,000$1000Painting$1000$9,000$8000 LossHome sound system$11000$12,000$1000 Losslisted company shares$20000$5,000$15000Net capital gain= $5000Based on the above computation, it can be seen that the losses for the year have been set-off withthe income in the same year so that net capital gain can be determined. Furthermore, it must also be noted that the above-mentioned assets have formed part of the computation because their 2

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Taxationacquisition cost is more than what is specified for taxability of capital gain. Overall, after considering all such scenarios, the net capital gain comes to $5000 for Eric in the given year.3

Taxation Law Assignment Capital Gains Tax_3

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