Taxation Law

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

TAXATION LAW1
Table of Contents
Answer to question 1:...................................................................................................2
Answer A:..................................................................................................................2
Answer B:..................................................................................................................2
Answer C:..................................................................................................................3
Answer D:..................................................................................................................3
Answer to question 2:...................................................................................................4
Issues:.......................................................................................................................4
Rule:..........................................................................................................................4
Application:................................................................................................................5
Conclusion:...............................................................................................................7
Answer to question 3:...................................................................................................7
Issues:.......................................................................................................................7
Rule:..........................................................................................................................7
Application:................................................................................................................8
Conclusion:...............................................................................................................9
References:................................................................................................................10

TAXATION LAW2
Answer to question 1:
Answer A:
A gain that is characterised as the capital will not be the subject to income tax
under the ordinary concepts. The regime of capital gains tax states that it began on
September 20, 1985 and all the capital receipts are bought into the tax base. The
income tax liability of the taxpayer includes the net capital gains (Devereux and
Sørensen 2016). When it is noticed that the taxpayer purchases the assets before
the introduction of the CGT regime then the asset is considered as the pre-CGT
asset. On the other hand, the assets that are purchased following the introduction of
the CGT regime then it is known as post-CGT asset.
As understood in the situation of Antique the father of Halen bought the
antique impression of painting on February 1985. Therefore, it can be stated that the
asset is the pre-CGT asset and the sale of the painting by Helen should be
considered as the exempted asset and no tax is applied on the gains that is made
from antique impression.
Answer B:
As stated in the “section 108-10 ITAA 1997” collectables are defined as
asset that is mainly kept for their own use usage or the taxpayers associate. Most
notably under “section 108-10 (2), ITAA 1997” where the list of collectables has
been provided (Lev and Nissim 2014). This usually involves the antiques and
jewellery, art works, coins and rare stamps. The taxpayer should include the net
capital gains for the income year under the “section 102-5, ITAA 1997” as the
assessable income.

TAXATION LAW3
As explained in the case of Helen, she has bought the historical sculpture on
the December 2018. However, it should be denoted that the historical sculpture was
sold by Helen 1st January 2018 for the sales price of $6,000. A capital gain is made
in this case by Helen from the sale of collectables. As she has made the capital gain
from the collectable, Helen under the “section 102-5, ITAA 1997” will be required to
include the gain in her assessable income for the income year.
Answer C:
Collectables are subjected to special rules. The capital loss that is sustained
from the collectables are required to be separated and the loss is only permitted to
be offsets against the gains that the taxpayers makes from the collectables under the
“section 108-10 (1), ITAA 1997” (Dhaliwal et al. 2017). Most notably the “section
108-10 (4) of the ITAA 1997” explains that the unused amount of the capital loss
that is sustained from the collectables must be carried forward by the taxpayer in the
future year.
In the year of 1987 in October, Helen had purchased the antique jewellery
that had the purchase value of $14,000. The antique jewellery piece was sold by
Helen during the month of March 2018 for a sales value of the $13,000. As a result,
a capital loss $1000 is incurred from the sale of collectables. The capital loss that is
suffered by Helen from the jewellery will be considered for offset against capital
gains that is made from the sale of the sculpture. Consequently, the used amount of
loss from the collectables should be carried by Helen to the future based on the
legislative provision of “sec 108-10 (4), ITAA 1997”.