Capital Gains Tax and Capital Allowance in Taxation Law

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

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Table of Contents
Answer 1: Capital Gains Tax.........................................................................................2
(A) The Capital gain related to the Family Home..................................................2
(B) Capital gain/loss made from car.......................................................................3
The Capital gain in relation to:...................................................................................4
(C) The Sale of Business........................................................................................4
(D) Selling the Furniture.........................................................................................5
(E) Selling the Paintings.........................................................................................6
Answer 2: Capital Allowance........................................................................................7
 Identification of Issues.....................................................................................7
 Laws.................................................................................................................7
 Application.......................................................................................................8
Conclusion....................................................................................................................10
References....................................................................................................................11

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Answer 1: Capital Gains Tax
According to the case, 65-year-old Jasmine is an Australian resident and born in the
UK. As she was looking after her cleaning business there and now she is at her retiring stage.
Therefore, she wants to sell off her assets so that at this stage, she can go back to her born
place. The discussion below is of the list of assets that Jasmine is selling and the related
Capital Gain Taxes:
(A) The Capital gain related to the Family Home
As per the law those assets that have been bought on/after the period of 20 September
1985, the tax related to the capital gain will be liable to be imposed upon those assets. Here,
Jasmine has her own house in which she was residing along with her family for so many
years. In the situation of purchasing before the date of 20 September is referred to as Pre-
CGT (Ato.gov.au 2019). The taxpayer must be aware of the exemption that he/she is liable to
receive on their capital gain/loss occurred with the CGT event (Blissenden 2015). If an
individual has kept the ownership of his/her house throughout their living period, then that
will be treated as the primary residence consider to the CGT asset under “Section 118-110
(1)” of Income Tax Assessment Act, 1997.
Computation of Capital Gain/Loss
Particulars Amount ($)
Selling amount 650,000
Less: Cost Base 40,000
Capital Gain 610,000
As per the stated case, Jasmine’s home was purchased in 1981 for $40,000 that is now
worth $650,000, and it is treated as Jasmine’s main residence. Jasmine has purchased her

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house before 20th September 198. It will be considered to be Pre- CGT. As considering her
throughout the period of living in that house from the time she bought the house will be
treated as the main residence within “Section 118-110 (1)”.
Hence, exempted from the Capital gain tax that is occurring from the selling of the
house.
(B) Capital gain/loss made from car
Within “Section 104-10 (1)”, it has been stated if an individual is selling off his/her
CGT asset, then there will be an occurrence of CGT event C1. Along with that it has been
stated under “Section 108-20 (2)”, the asset will be considered as for the personal use of the
individual if he/she is using that asset for the private purpose or used as some mode of
entertainment The personal assets used by a taxpayer includes the items such as Television at
home, Cellphones for private use, bicycle or a car and a ship for private purpose.
There are some special rules and laws made for the assets that are used for personal
purpose (O’Connell 2017). Further, for this case referring the “Section 108-10 (3)” that states
that the acquiring price of an asset is less than $10,000 then it will be omitted from the
Capital Gain Tax. Along with this as per “S 108-20 (1)”, if taxpayer held with any capital
loss then that will be omitted from the CGT.
Computation of Capital gain/loss, made by Jasmine is as shown below.
Computation of Capital Gain/Loss
Particulars Amount ($)
Selling amount 10,000
Less: Cost Base 31,000
Capital Loss 21,000