Taxation Law: CGT Consequences of Sale of Assets

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

1TAXATION LAW
Question Number 1:
Part 1:
The issue that has to be discussed in this part of the question is identification of the
consequences of capital gain by the sale of antique painting of sale.
The issue is to be analysed according to the provisions laid down in the Income Tax
Assessment Act 1997 (Woellner et al. 2016.). As per sec. 180-10 (2), the antique
impressionism painting will be considered to be a collectable and also a capital gain asset.
According to the provisions of sec. 102.2, CGT is applicable when a CGT incident has taken
place according to the table provided under sec. 104.5 of ITAA 1997. The sale of a CGT
asset or its disposal is to be regarded as an event of CGT A1 as seen in the sec. 104-10(1).
The TP (tax payer) will be an owner at the time when the asset is being acquired as given in
sec. 109-5(1).
From the facts of the case, it cannot be ascertained when Helen acquired the painting.
The reason behind this is that the antique impressionism painting was bought by Helen’s
father. If the antique impressionism painting was bought before 20th September of the year of
1985, it will be considered as a pre CGT asset and hence will be excluded from CGT. If it
was collected by her father after the mentioned date, it will be considered as a collectable.
From sec. 110-25(2), the cost base E1 is the acquisition price of the painting which is 4000
dollars. Since it was purchased by her father, she would have got the painting by gift or by
will. According to that, CB will be varied by the market price present at the time of
acquisition according to sec. 112-20. The selling price of 12000 dollar will be regarded as the
capital proceeds according to sec. 116.20. The CG is equal to Capital proceeds minus Cost
Base. If the asset is hold for more than one year, then she will be eligible under Div. 115 to
incur a discount of 50 percent.

2TAXATION LAW
Part 2:
The issue to be discussed in this part is the determining the CGT effect due to the sale
of the historic sculpture.
Helen had made a sale of a historic sculpture on 1st of January of 2018 at 6000 dollars.
As per sec. 180-10 (2), the historic sculpture will be considered to be a collectable and also a
capital gain asset. According to the provisions of sec. 102.2, CGT is applicable when a CGT
incident has taken place according to the table provided under sec. 104.5 of ITAA 1997. The
sale of a CGT asset or its disposal is to be regarded as an event of CGT A1 as seen in the sec.
104-10(1). The TP (tax payer) will be an owner at the time when the asset is being acquired
as given in sec. 109-5(1). In this case, Helen made its purchase on December of 1993 for
5500 dollars. This will be regarded as the acquisition’s time of the sculpture. Thus it is an
asset of post CGT and its sale is the CGT A1 event as per sec. 104-10(1). The cost base E1 as
per sec. 110-25(2) is equal to 5500 dollars that is the price of acquisition. The CP is the
selling price of 6000 dollars according to sec. 116.20. The Capital Gain= CP – Cost Base. It
means 6000 $ - 5500 $. Hence the final CG is 500 dollars. It also means that she is eligible to
a discount of 50 % as per sec. 115.10 because she being an individual and is being holding
the asset for about a year as per sec. 115-15 and she has acquired the sculpture after
December 1993 according to sec. 115-25.
Part 3:
The issue here is determining the CGT effect on the sale of the jewellery.
The jewellery piece was sold by Helen on 20/03/2018 at the price of 13000 dollars
which she bought for 14000 dollars on October of 1987. As per sec. 180-10 (2), the historic
sculpture will be considered to be a collectable and also a capital gain asset (Jones 2016).
According to the provisions of sec. 102.2, CGT is applicable when a CGT incident has taken