Taxation Law

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

TAXATION LAW1
Question 1
Issue 1
The CGT implication of the sale of an antique painting purchase in February 1985 worth
$4000 and sold in in December 2018 for price of $12,000.
Rule
The profits as well as losses arising from the happening or not happening of a CGT event
will always imply a CGT loss or a CGT gain as per section 102.20 ITAA1997. The CGT
event that involves the seal affected with respect to work CGT asset is to be brought under
the purview of CGT event A1 as provided under section 104.10 ITAA1997. An asset is
allowed to be treated as a CGT asset, only if it can be proved that the acquisition of the same
has been affected on or after 20.09.85. Any asset acquired on a prior date to that of the
prescribed will be required to be treated as an exemption from the CGT computation.
Application
In the present instance the painting has been acquired on February 1985. This implies the
painting to be bought on a pre-CGT date rendering the asset to be a pre-CGT asset. Although
the disposal of such an asset would have fallen under the category of A1 of the CGT events
but the acquisition of the same prior to the introduction of CGT have rendered the transaction
to be excluded from the incidence of CGT. Hence this sale of the painting on December 2018
needs to be excluded from the computation of CGT.
Conclusion
Hence this sale of the painting on December 2018 needs to be excluded from the
computation of CGT.

TAXATION LAW2
Issue 2
The CGT consequences of the sale of historical sculptor that has been purchase for rise of
$5,500 on December 1993 and sold on 1st January 2018 for a price of $6000.
Rule
Collectible depicts any commodity that has been possessed by the taxpayer for being used
in personal purpose and being held for personal enjoyment under section 108.10(2)
ITAA1997. All the antiques, artworks, jewellery and other similar objects are treated as a
collectible under this section. Any collectible whose worth fails to exceed $500 will not be
considered as a CGT asset as per section 118.10(1) ITAA1997. Such collectibles needs to be
treated as exemption from the computation of CGT as per section 110.10.
Application
Historical sculpture being an artwork as well as antique object is required to be treated as a
collectible. It has been purchased on 1993 and the sale was affected on 2018, this renders the
collectible to be a post-CGT asset. Again the price of the same has exceeded the threshold of
$500. The acquisition price in its entity is $5,500. This makes the collectible to have incurred
a gain. Being a CGT asset this gain is required to be treated as a CGT gain and needs to be
included in the computation of the CGT. Hence the sale of the historical sculpture by Helen
for a price of $6000 is required to be treated as a CGT gain and is need to be included in the
CGT computation.
Conclusion
Hence the sale of the historical sculpture by Helen for a price of $6000 is required to be
treated as a CGT gain and is need to be included in the CGT computation.