Taxation Law: Capital Gains, Personal Exertion Income, and Interest Payment

Running head: TAXATION LAW
Taxation Law
Name of the Student
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TAXATION LAW1
Table of Contents
Answer to question 1:...................................................................................................2
Answer to question 2:...................................................................................................3
Answer to question 3:...................................................................................................4
References:..................................................................................................................7

TAXATION LAW2
Answer to question 1:
Capital gains from Antique impression:
The regime of capital gains tax is integrated into the regimes of income tax.
The capital gains tax cannot be viewed as the separate tax. The legislative provision
of “s102-5, ITAA 1997” explains that an individual net capital gains that is made in
the income year is considered for taxable purpose (Richardson and Lanis 2017).
Most notably the capital loss should be offset against the capital gains that are not
held deductible. Capital gains is only allowed to be imposed on the assets that are
purchased on or after the 20th sept 1985.
Helen in an effort to fund the retirement fund sold the antique impression that
she bought in February 1985. The disposal of antique painting led to capital gains for
Helen. But it must be noted that the painting is the pre-CGT asset as it is bought
before 20/9/2018. Similarly, the capital gains that is made is excluded from the CGT
regime.
Capital gains from historical sculpture:
A CGT event A1 incurs upon disposing the CGT asset under “s104-10(1)”.
Referring “s108-10(2)” the artwork, jewellery, postage stamp, antiques is regarded
as collectibles. This is generally under the ownership of taxpayer for private
enjoyment purpose (Cunningham and Engelhardt 2018). Helen in a bid to start her
new fashion designer business sold the historical sculpture. The sales raise $6000
for Helen while the purchase value was $5,500. It can be said that CGT event A1
happened when Helen sold the sculpture. The capital gains that is made from
sculpture is taxable under legislative provision of “s102-5, ITAA 1997”.
Capital gains from jewellery:
Apart from defining the collectables it is necessary that some important rules
are applied on the collectables (Barkoczy and Wilkinson 2019). the capital gains and
capital loss must be ignored when the first element of the cost base relating to
collectables is not met and the cost of asset is below $500. Similarly, the
quarantining rule also makes it clear for the taxpayer that the capital loss from the
collectable must be used to offset the capital gains from collectables.
The antique jewellery purchased in October 1987 by paying a sum of $14,000
only fetched Helen $13,000 when it was sold. The jewellery should be treated as
collectables under “s-108-10(2)”. The quarantining rule must be applied by Helen
since the antique jewellery has led to loss for Helen. She is here recommended that
capital loss can be reduced from the capital gains made from historical sculpture and
the quarantining rules must be applied by Helen.
Capital gains from picture:
Accordingly, in the “s-108-20” personal use assets involve the TV at home,
bicycle, mobile phone etc. are usually kept by taxpayer for their own enjoyment and
usage. The capital loss or gains must be ignored if the asset cost is less than $10k
(Braithwaite 2019). Helen sold the picture that was purchased for $470. The sale of
picture resulted in capital gains. However, Helen under the special rules relating to
the personal use asset should ignore the capital gains made from picture because it
is personal use asset and the cost base of picture is lower than 10k.