Taxation Law: Capital Gains and Deductions

TAXATION LAW

TABLE OF CONTENTS
INTRODUCTION...............................................................................................................1
QUESTION 1.....................................................................................................................1
a) Sale of land................................................................................................................2
b) Sale of Shares ...........................................................................................................3
c) Sale of stamp collection ............................................................................................3
d) Sale of Guitar of Bob Marley......................................................................................4
QUESTION 2 ....................................................................................................................4
a) Travelling Expenses...................................................................................................5
b) Moving expenses for relocating to Darwin ................................................................5
c) Payment for whit uniform...........................................................................................5
d) Expenses for childcare...............................................................................................6
e) Phone calls to attend patients....................................................................................6
f) Purchase of food for working in evening shifts...........................................................6
g) Fine on speeding ......................................................................................................6
h) Travelling Expenses...................................................................................................6
CONCLUSION ..................................................................................................................7
REFERENCES..................................................................................................................8

INTRODUCTION
Taxation in Australia is monitored and collected by federal government via
Australian Taxation Office. GST is collected by Federal government and paid to states.
Income tax on individual is imposed at federal level. Personal income tax in Australia is
imposed over personal incomes of every person on progressive, higher the income
higher the rates. In Australia personal income tax is imposed over individual and not
over a family unit (Woellner and et.al., 2016). Every income of the individual is required
to be reported in his income tax return. Present report will reveal about the income that
are required to be reported in the tax return of individual. This will also include the
capital gains over sale of assets and deductions that could be availed by individual for
reducing the taxable income. Report is based on the rules and provisions of ITAA 1936
and ITAA 1997.
QUESTION 1
Capital Gain Tax
Country is having comprehensive CGT regime from September 20, 1985.
Individuals are required to understand frameworks of these provisions for avoiding any
adverse CGT consequences. Law do not provide for any specific tax rate for capital
gain. Capital gains are included in the assessable income of tax payer and it is taxed on
the assessable income at marginal tax rate. Marginal tax rate is applied with Medicare
levy of 2%. If an individual holds an asset for more than 12 months before it is disposed,
he is entitled to CGT discount of 50%. That mean half of the capital gain is taxable.
Capital gain or loss is usually made over capital assets like shares or real estate.
Capital gain is difference between cost which was paid for acquiring the assets and the
money received on its disposal. Capital gains are required to be reported in tax return of
individual and to pay tax over capital gain. Capital gain tax is not separate tax and is
charged along with the assessable income of individual. Capital gains increases taxable
income of an individual and tax liability required to be paid (Sadiq, 2019). Capital losses
can be claimed only against the capital gain and not on any other income. Most of the
personal assets do not have to pay tax over capital gain. It also do not apply over
depreciating assets which are used solely for the taxable purpose.
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