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 to Question 1:................................................................................................................2
Answer to Question 2:................................................................................................................6
References:...............................................................................................................................10

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Answer to Question 1:
The Capital Gain in relation to the Family Home
Capital Gains tax is use to be applied on those assets that has been purchased on or
after 20th September 1985. Accordingly, the terms Pre CGT and Post CGT has usually used to
refer that asset which has bought on the preceding that date or following that date (Burns
2019).
Taxpayer should know about that the basic exemption they are permissible for the
capital gain or loss that has generated from the occurrence of CGT event. The CGT asset is
considered as House within the “s.118.110 (1), ITA Act 97” where the house formed will be
treated as the main residence of the taxpayer in the whole period of their ownership (Bain and
Boccabella 2019).
It has stated that in the year 1981, Jasmine has bought her home which amount was
$40,000 and now it is worth $650,000. This has sold out in the current year. This home was
Jasmine’s main residence since she purchased the house. Since the home, that Jasmine has
purchased as earlier to the required application of the CGT rule. Hence, her home has
recognized as a Pre-CGT asset. Additionally, she has lived in that house from the time since
she has bought it and her residing in that house ever has treated as main residence under “sec
118-110 (1)”. Therefore, the Capital Gain has omitted from CGT.
Capital gain/loss made from the Car
CGT event A1 occurred within “s.104-10 (1)” if CGT asset is sold by the taxpayer.
Private Asset under “s.108-20 (2))” refers to those assets except land and building that has
used by the taxpayer as for their personal purpose or entertainment (Freundenberg and Minas
2018). The occurrence of Private assets used by a taxpayer mat include the following:

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 TV at house
 Mobile Phone for personal use
 A car or bicycle
 A ship for personal use
Some rules have made that is specifically applicable on the private use of an asset.
When the purchaser has made purchase of an asset for $10,000 or less than that then it will be
disregard from the capital gains with the use of asset for personal purpose under “s.108-10
(3)” (Minas, Lim and Evans 2018). On the existence of capital loss that is raised from the
sale of a private use asset, it gets omitted considering to “s.108-20 (1)”.
It is obvious that Jasmine has purchased a car in the year 2011 amount as $31,000 and
eventually the car has sold for $10,000 or less than that. This has shown a transparent result
that Jasmine has made a loss on the sale of her car. As the car, that Jasmine had was for the
personal use. Therefore, under “s.108-20 (1)” capital loss has disregarded.
The Capital Gain in relation to the Sale of Business
Reduction under “Div-152” has made available to the small entities to help them. Some
conditions are as follows:
i. The business must be small business entity that have the turnover of less than $2
million in the current as well as in the previous year (Middleton 2018),