Taxation Law Analysis: Antique Painting, Historical Structure, Jewellery Piece, and Picture

This report undertakes analysis of the issue of the monetary benefit from the sales of the antique painting, historical structure, jewellery piece, and picture. It discusses the CGT consequences and provides insights into the taxation laws.

Running Head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note

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TAXATION LAW
Table of Contents
Question 1........................................................................................................................................3
Part 1............................................................................................................................................3
Part 2............................................................................................................................................3
Part 3............................................................................................................................................4
Part 4............................................................................................................................................5
Question 2........................................................................................................................................6
Part 1............................................................................................................................................6
$13000..........................................................................................................................................6
$13400..........................................................................................................................................7
$4350............................................................................................................................................7
$3200............................................................................................................................................7
Part 2................................................................................................................................................8
Question 3........................................................................................................................................8
Application......................................................................................................................................9
Conclusion.....................................................................................................................................10

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TAXATION LAW
Question 1
Part 1
This report undertakes analysis of the issue of the monetary benefit from the sales of the antique
painting by Helen.
This painting is a collectible item and the monetary asset gained from its sales, as for the section
108-10(2) ITAA97. According to the statement in the section 102.2 CGT, Assets or DISPOSAL
OF ASSETS can be considered to be a CGT event A1 according to the section 104-10(1). The
timing of the Asset acquisition is the moment when the TP will be considered to be the owner
according to the section 109-5(1).
It is unclear from the present facts when Helen will be acquiring the painting. The reason is that
his father purchased it. In case if the purchase of the painting was done before 20th September of
1985 it will be exempted from CGT as it will be considered as a pre CGT asset. In case if the
acquisition is made after that date then it will be deemed as a collectible asset. As per the
element one of the section 110-25(2), the cost basis will be e the price of acquisition which is is
4000 US dollars. Nevertheless, as it might have been acquired by her by means of death or
through gift, the cost basis will undergo modification according to the market value of the time
when it was acquired on the basis of 112-20. According to the section 116.20, the seal price of
12000 US dollars will be considered as the capital proceeds in this case. The calculation of the
CG will be done by the deduction of cost base from the capital proceeds. If the asset is held by
him for over and here, she will be benefited with 50% discount for the same according to the
layout of the division 115.
Part 2

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TAXATION LAW
In this context the issue is determination of CGT consequences from the sales of historical
structure by Helen.
This structure which was sold by Helen can be considered as a collectible as well as capital gain
asset according to the provisions of the section 108-10(2) ITAA97. It has been stated in the
section 102.2, that CGT will be applicable in case there is any CGT event as per the table
provided according to section 104.5. According to the section 104-5, the CGT event A1 will
consider the sale of any CGT asset or their disposal (Barkoczy 2016). The timing of the Asset
acquisition is the moment when the TP will be considered to be the owner according to the
section 109-5(1).
In this context, the acquisition timing is is the month of December of 1993 which makes the
historical structure an asset of post CGT period and the It has been stated in the section 102.2,
that CGT WILL BE APPLICABLE IN CASE there is any CGT event as per the table provided
according to section 104.5. The cost base in case of this acquisition, as considered by section
110-25(2) element one will be held at acquisition price of 5500 US dollars. In this context, the
capital proceeds will be regarded as the sale price of 6000 US dollars according to the section
116. 20 (Sadiq et al. 2012). The calculation of the CG will be done by the deduction of cost base
from the capital proceeds.This implies that the overall capital benefit in this sales process for
Helen will be the sum obtained after deduction of 5500 from 6000. Therefore the total CG is
calculated at $500. Therefore Helen will be enabled to get a discount of 15% according to the
provisions of the section 18 15.10 since she is an individual and has been holding an asset for
one year and according to the section 115-15, the acquisition of the asset was done after
September of 1999 according to the section 115-25.
Part 3

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TAXATION LAW
In this case determining CGT consequences for the jewellery piece is the primary issue.
The piece of antique jewellery which Helen sold, can be considered to be collectible as well as
capital gain asset according to the provisions of section 108-10(2) ITAA97. It has been stated in
the section 102.2, that CGT will be applicable in case there is any CGT event as per the table
provided according to section 104.5.selling or disposing any CGT asset will be considered to be
a CGT event A1 according to the provisions of the section 104-10(1). In this context, that caused
base as per the provisions of section 110-25(2), element one will be considered to be the
acquisition value of 14000 US dollars. Again, capital proceeds value will be same as the SP
value of 13000 US dollars, as per the conditions of section 116. 20. The CL value will be
obtained by reduction of cost base from the capital proceeds. Hence, the total CL valuation is
1000 US dollars. This loss might be offset against the games from collectible capital and not
from the capital gains by virtue of normal assets. In anyway, this loss will be carried forward to
the following year.
Part 4
In this case the issue is determination of the CGT consequences against the picture which Helen
sold.
This is a collectible item as well as an asset for capital gain according to the provisions of section
108-10(2) ITAA97. According to the statements of the section 102.2 CGT will be incurred only
when any CGT event occurs according to the provisions of the table in section 104-10(1)
(Woellner et al. 2010). The appropriate timing for the acquisition of this asset is when the
ownership will be held by TP according to the section 109-5(1).

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TAXATION LAW
The presentation of the fact makes it confusing, whether Helen acquired the painting. This is
because, her mother purchase it. Only in case if the acquisition of the painting was done after 28
November 1985, this item will be considered as collectible. As per the provisions of section 110-
25(2), element one, the cost base will be the acquisition price of 470 dollars. Howsoever since
Helen acquired this by means of death or through gift, there will be a modification of the cost
base as per the market valuation during the acquisition time, as per section 112-20 (Woellner et al.
2010). The capital proceeds in this case will be considered to be the sale price of 5000 US dollars
according to the section 116.20. The value of capital gain will be decided after deduction of cost-
base from capital proceeds. If Helen had the ownership of this asset over and here, she will be
liable to get 50% discount on the same asset according to the division 115.
Question 2
Part 1
The issue in this context is to decide if the receipt made by Barbara according to the facts, can be
considered as income from personal exertion.
Income from personal exertions has been articulated in in section 6-1 of the ITAA36. However
this broad definition is not suitable for categorisation of the receipt. This requires reference to
specific case laws. In this context, in the case of Hayes vs. FCT 1956 the statement from the
Court was that receipt will be considered as General income since the case of this receipt being
income from personal exertion might be e considered as a reward or an outcome from activities
intended to earn income.
$13000

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TAXATION LAW
For simplifying it there should be sufficient Nexus among the services provided as well as the
receipt of income. Any measure amount paidto one independent contractor be considered as OI
because it is derived from the personal services provided. Similarly, Barbara received 13000 US
dollars for or writing the book and since she can be considered as one independent contractor,
the income generated from this source will be considered to be receipt gained as income from
personal exertion. Dissimilar consequences are also obtained in the court case of Brent vs. FC of
T (1971) ATC 4195.
$13400
Barbara received this value from sales of copyright of her book to the Eco books. Providing
rights will be usually considered as capital receipt. It can be recorded that the same has been
considered in the court case of Brent vs. FC of T (1971) ATC 4195. The code in this case
provided the statement that in case the TP had assigned copyright, then the income generated
will be considered as capital receipt. Hence, in this case also, assignment of copyrights is done
by Barbara and that is why this will be held as capital receipt and not income generated from
personal exertion.
$4350
The income generated by selling book manuscript will be accepted as income generated from
personal exertion. The same outcome was evident in the case of Hobbs vs. Hussy (1942) TC 153
where the opinion of the court was that the sales of rights regarding autobiography will be
considered to be an assessable income. The main reason behind this is that the activity was
conducted by Barbara with the purpose of earning profit.
$3200

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TAXATION LAW
Income generated from selling interview managed it will be considered as income generated
from personal exertion. Contextualizing to the court case of Hobbs vs. Hussy (1942) TC 153it
can be commented that the selling of rights regarding autobiography was considered to be
assessable income by the court. The primary reason behind this is that Barbara conducted this
activity with the target of profit making.
Part 2
In this case the issue is regarding determination of the kind of receipts made by Barbara, in case
she wrote the book during her spare time.
According to the section 6-5, income incorporates received from ordinary heads income.
Intention of profit-making is must for income to be considered as receipt (Barkoczy 2016).
In this context, the taxation rule of 97/11 considers that Income generated from any hobby will
not be assessable income.
Hence, was written by paper in spare time and there had not been any intention of profit making
involved, or any Nexus between the services provided and the money received by her, the
income will be automatically deemed as income derived from hobbies and therefore those will
not be assessable income. Barbara would not be considered to have conducted any business
activity as any of the factors that are required for an activity to be considered as business
according to taxation rule 97/11 was not satisfied by her.
Question 3
The primary debate in this context is with identification of the fact whether the amount which the
Son repaid in form of additional 5% is an accessible income or not.

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TAXATION LAW
In the court case of FC of T vs. Whitfords Beach Pty. Ltd (1982) ATC 4301, IT WAS
CONSIDERED BY THE COURT THAT any person dealing in any on off transaction with the
intention of generating profits, the transaction receipt will be accepted to be e a form of income
for the taxpayer. In the court case of Lomax vs. Peter Dixon, it was stated by the court that
interest will be deemed to be ordinary income for the taxpayer.
In the court case of FCT vs. Myer Emporium Ltd. the same rules have been highlighted. The first
standard in this case holds that when there is any transaction conducted with the attitude of
generating profit this might be treated as income for the taxpayer.
Application
The facts provided here shows that the father provided the son with a loan. In spite of the fact
that no interest was demanded by the father in context to that loan, the son promised a payment
of additional amount with the principal after the completion of the loan period. This implies that
the father incorporated an attitude of generating profit at the time of providing the loan. There
would have been different outcome if repayment of the loan was not done with the additional
payment. However, the extra payment with the original value deemed this transaction to be
considered as provision of lump sum value with monitory interest. However, in this case
repayment of the loan was done on an earlier date and the payment was provided with 5%
additional value compared to the original value of the loan. Hence, the additional value is income
generated by the father. According to the court case ofFC of T vs. Whitfords Beach Pty. Ltd
(1982) ATC 4301FC of T vs. Whitfords Beach Pty. Ltd (1982) ATC 4301,if any person dealing
in any on off transaction with the intention of generating profits, the transaction receipt will be
accepted to be e a form of income for the taxpayer. Besides, the receipt can be also categorised

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TAXATION LAW
under the first stand taken in the Myers case. Hence, the additional 5% value provided to the
father can be easily considered as assessable income for him.
Conclusion
The additional 5% value provided to the father can be easily considered as assessable income for
him.

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TAXATION LAW
Reference List
Barkoczy, S., 2016. Foundations of taxation law 2016. OUP Catalogue.
Brent v FC of T (1971) ATC 4195
FC of T v Whitfords Beach Pty Ltd (1982) ATC 4031
Federal Commissioner of Taxation v Myer Emporium Ltd (No 1). [1986] HCA 13
Hayes v FCT 1956
Hobbs v Hussy(1942) TC 153
Income Tax assessment Act 1936 (Cth)
Income Tax assessment Act 1997 (Cth)
Sadiq, K., Coleman, C., Hanegbi, R., Hart, G., Jogarajan, S., Krever, R., McLaren, J., Obst, W. and Ting,
A., 2012. Principles of taxation law 2012. Thomson Reuters.
Woellner, R.H., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2010. Australian taxation law. CCH
Australia.