Taxation Law: CGT, Collectibles, Personal Exertion Income, Loan Repayment

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

TAXATION LAW1
Answer 1
Issue 1
The tax implications of the proceeds from the sale of an antique impressionism painting as
sold by Helen for a price of $12000.
Rule
Section 102.20 ITAA97: CGT event occurs with the occurrence of a transaction relating to
a CGT asset and any gain or loss arising from the same is required to be treated as a CGT
gain or loss, which is taxable under the CGT tax liability. However, the asset needs to be
purchased prior the date of 20.09.1985.
Section 104.10 ITAA97: disposal of a CGT asset by the procedure of sale is required to be
assessed as an A1 category to CGT event and needs to be taxed likewise.
Application
In the present case, an antique impressionism painting is sold by Helen for a price of
$12000, which has been bought by her father in the month of February in the year 1985 for a
price of $4000. The acquisition of the painting has been made prior to the prescribed date for
the application of CGT. The implementation of further sections of the Act will not be
necessary as the same has been purchased in the pre-CGT period and hence the same is
required to be disregarded from the computation of CGT liability.
Conclusion
Hence, the sale of the antiques impressionism painting is to be kept outside the purview of
the computation of CGT liability.

TAXATION LAW2
Issue 2
The tax implications of the proceeds from the sale of an historical sculpture as sold by
Helen for a price of $6000.
Rule
Section 108-10(2) ITAA97: collectible is an item that has been acquired as well as
possessed by the person paying the tax for being used personally for enjoyment. This item
includes jewellery, artwork, antiques and other similar objects.
Section 118.10 ITAA97: In its general sense, collectible is treated as a CGT asset for the
purpose of taxation. Again, for the purpose of being subjected to CGT, a collectible needs to
have the worth of anything beyond the amount of $500.
Section 110-10 ITAA97: any collectible, which has a worth amounting to anything less
than the amount of $500 will be admitted to computed under the computation of CGT
liability. The same is required to be treated as an exemption from the calculation of CGT.
Application
In this given instance, there has been sale of a historical sculpture effected by Helen for a
proceed of $6000, which has been bought by Helen for a price of $5500. This needs to treated
as a collectible as it is an item that has been acquired as well as possessed by Helen for being
used personally for enjoyment. The price of the sculpture also exceeds the price of $500 and
hence is to be included in the CGT assessment. Hence, the historical sculpture is required to
be treated as a CGT asset and the proceed from the same as a CGT gain.
Conclusion
The proceed from the sale of the historical sculpture is to be treated as a CGT gain.