Taxation Law: CGT Implications and Income from Personal Exertion

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

TAXATION LAW1
Answer 1
Item 1
The CGT implications arising out of the sale of sale of antique painting by Helen.
Antique painting implies CGT asset and to be more precise a collectible as provided in
section 108.10 of the ITAA 1997. A CGT liability is said to have accrued under section 102.2
only if a CGT event has occurred under section 104.5. The disposal of a CGT asset by way of
sale is to be considered under A1 category of CGT events under section 104.10. The time of
procurement of the CGT asset is said to have effected, if the same has conferred upon the
taxpayer an ownership over the asset as has been made evident in section 109.5.
The facts of the case does not present any clear picture about the timing at which the painting
has been procured by Helen. The reason behind the same is that the painting has been
acquired by her father. If the painting has been purchased prior to 20/09/1985, it would have
been treated as a pre-CGT asset which would have rendered the transaction relating to the
asset to be an exemption from the computation of CGT. However if the procurement of such
a asset has been made subsequent to that date it will be treated as a collectible. The cost base
pertaining to the asset will be the procurement cost of the acid that is element one of the cost
base amounting to $4,000 as provided in section 110.25. Again there is a probability that the
asset might have been acquired by Helen by way of gift or succession. In such a case the cost
base will be modified by the market value as per section 112.20. The capital proceed will be
the proceeds earned from the sale that is $12000 in section 116.20. The CGT gain will be
computed by deducting the CB from the CP. A father 50% discount under div 115 will be
allowed if the acid has been retained by her for more than 1 year.
Item 2
The CGT implications arising out of the sale of sale of historical sculpture by Helen.

TAXATION LAW2
Historical sculpture implies CGT asset and to be more precise a collectible as provided in
section 108.10 of the ITAA 1997. A CGT liability is said to have accrued under section 102.2
only if a CGT event has occurred under section 104.5. The disposal of a CGT asset by way of
sale is to be considered under A1 category of CGT events under section 104.10. The time of
procurement of the CGT asset is said to have effected, if the same has conferred upon the
taxpayer an ownership over the asset as has been made evident in section 109.5.
In this case the historical sculpture will be treated as a collectible. The cost base pertaining to
the asset will be the procurement cost of the asset that is element one of the cost base
amounting to $5500 as provided in section 110.25. The capital proceed will be the proceeds
earned from the sale that is $6000 in section 116.20. The CGT gain will be computed by
deducting the CB from the CP. A further 50% discount under div 115 will be allowed if the
acid has been retained by her for more than 1 year. The deduction of the cost base from the
cost proceed presents a CGT gain of $500.
Item 3
The CGT implications arising out of the sale of sale of antique jewellery by Helen.
Antique jewellery implies CGT asset and to be more precise a collectible as provided in
section 108.10 of the ITAA 1997. A CGT liability is said to have accrued under section 102.2
only if a CGT event has occurred under section 104.5. The disposal of a CGT asset by way of
sale is to be considered under A1 category of CGT events under section 104.10. The time of
procurement of the CGT asset is said to have effected, if the same has conferred upon the
taxpayer an ownership over the asset as has been made evident in section 109.5.
In this case the antique jewellery will be treated as a collectible. The cost base pertaining to
the asset will be the procurement cost of the asset that is element one of the cost base
amounting to $14000 as provided in section 110.25. The capital proceed will be the proceeds