Taxation Law

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

1TAXATION LAW
Question 1
Part 1
The issue involves determining the capital gains consequences of the sale of an antique painting
by Helen.
This painting that was sold by Helen is a capital gains asset as well as a collectible as has been
suggested clearly by the 108 – 10 (2) ITAA97. It has been further stated in the s102.2 that a CGT
or capital gains tax will be triggered only if a capital gains tax or CGT event takes place under
the table that has been made available in s104-5. The disposal or the sale of CGT asset is the
CGT event A1 that is listed under s104-10(1). Timing of an acquisition occurs when TP becomes
owner as has been stated with clarity in s109(5)-1 (Barkoczy 2016).
What is not at all clear from the different facts that have been presented in the case as to when it
is that the painting was actually acquired by Helen. What accounts for this lack of clarity is the
fact that the painting was bought by none other than her father. Had the painting been procured
in the month of September in the year of 1985, it would have been exempted from the payment
of a CGT since it would then have been what is known as pre-CGT acquisition. Since it has been
acquired after this date, it is being designated as a collectible. In fact the cost base of the
collectible as stated in s110 (25) – 2 Element One is going to be the acquisition price amounting
to four thousand dollars. It needs to be remembered however that since Helen is likely to have
obtained this collectible as a gift or upon death of her father, the cost base of the collectible will
be modified by the market price or value of the same at the time of its acquisition, as stated in
112-20. Based on s116.20 it can be said that the sale price of the capital proceeds will be valued
at twelve thousand dollars. The capital gains will then be the value of the capital proceeds that

2TAXATION LAW
has been in turn deducted by the value of the cost base. If the collectible is held for a period of
more than one year, then Helen will be able to obtain a discount of as much as fifty percent, as
made available under Division 115.
Part 2
The primary aim here is to determine the consequences of capital gains after the historical
structure or collectible has been sold off by Helen.
It needs to be remembered that the historical structure being spoken of is a collectible as defined
under s.108-10(2) ITAA97. It has been stated in none other than s102.2 that the capital gains tax
is what is likely to be triggered only in the instance that a CGT event takes place as provided
under the table in s104-5. The CGT event A1 as mentioned under the provision of s104-10(1),
involves the sale or the disposal of CGT asset. Based on what is stated in s109-5(1), the time at
which the asset is acquired is when TP becomes owner. The timing of acquisition of the asset
occurred in the month of December in the year of 1993. This implies that the collectible or
historical structure as it is referred to is in essence a CGT asset, and the disposal of this CGT
asset is the CGT event A1 as mentioned clearly in the provision s104-10(1). In accordance with
what is mentioned in s110-25(2) Element One, the cost base is likely to be the acquisition price
that amounts of five thousand and five hundred dollars. The capital proceeds is what will be the
capital gains, which in turn will be deducted by the cost base. This implies that the total amount
of capital gains tax that accrues upon the sale of the collectible by Helen will be the value of six
thousand deducted by the value of five thousand and five hundred. The total capital gains will
therefore be amounting to $ 500. Helen would therefore be entitled to a discount of as much as
fifty percent as made available under the provision of 115.5. largely because of the fact that she