Taxation Law

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

1TAXATION LAW
Answer to 1:
Requirement 1:
The regime of CGT is applicable from 20/09/1985. Correspondingly, the word pre-
CGT and post-CGT is frequently imposed on the assets that are purchased or dealings that is
taking place before or subsequent the date of introduction of CGT regimes (Dietsch and
Rixen 2017). A gain that is held as the capital is not held as ordinary income within the
legislation of income tax. Accordingly, under the “section 102-20, ITAA 1997” a capital gain
or loss happens when transaction associated to the CGT originates. Upon disposing the asset
CGT event A1 takes place within the legislation of “Sec104.10(1)”.
Helen disposed the painting having the sales of $4,000. It can be stated that the
antique impression is a Pre-CGT asset because it was purchased before the introduction of the
CGT system (Stoilova 2017). Therefore, Helen is required to exclude it from the capital gains
regimes and hence no tax is applicable.
Requirement 2:
As clarified in the “section 108-10 (2), ITAA 1997” collectable is a type of asset that
is largely used by taxpayer or kept for own enjoyment purpose. The assets generally comprise
of the artwork, antique coin or the medallion. It also includes the manuscript or book or the
postage stamp (Spiro 2018). When the collectables are bought for below $500 then capital
gains or loss is excluded within “s118.10(1), ITA Act 1997”. While an important explanation
has been made under the “section 108-10 (1)”, capital loss that is obtained from the
collectables is only permissible to be subtraction against the capital gains from the
collectables (Belitski, Chowdhury and Desai 2016).
The case study evidently puts forward that Helen purchased a sculpture for a sum of
$5,500 during 1993. The collectables were sold for $6,000 on 1st January 2018.

2TAXATION LAW
Consequently, the sale of collectables has given rise to capital gains. The gains from the
collectables will attract capital gains tax liability.
Answer to 3:
The antique jewellery was purchased for a sum of $14,000 during October 1987 and
was sold for $13,000 in present tax year. As a result, the sale of antique jewellery for Helen
has given rise to capital loss. As explained in the “section 108-10 (1), ITAA 1997” the capital
loss that is suffered from the collectables is only permitted for deduction against the capital
gains that is obtained from the collectables (Everaert, Heylen and Schoonackers 2015). As
understood in the current situation of Helen, she has made the capital gains from the sale of
historical sculpture. With respect to the “section 108-10 (1), ITAA 1997” similarly, the
capital loss that is suffered from the sale of antique jewellery by Helen can be deducted from
the capital gains from the sculpture.
Answer to 4:
The “subdivision 108-C of the ITAA 1997” is related with the private use asset.
Accordingly, under the “section 108-20 (2), ITAA 1997” a personal use asset (PUA’s)is
generally defined as the non-collectable assets that is majorly kept or used by an individual
for their own use in the form of boats or right of purchasing the asset that is primary used or
kept by the taxpayer for their private usage and enjoyment (Black 2017). “Section 108-20
(3)”, explains that the PUA’s do not includes of the land or buildings. Furthermore, “section
118-10 (3)”, explains that the where the capital gains are made from the private use assets
that is purchased for $10,000 or less then capital gains is exempted in this situation.
Accordingly, “section 108-20 (1), ITAA 1997” explains that if the sale of personal use asset
has given rise to a capital loss then the taxpayer will not be permitted to claim income tax
offset for the loss against the capital gains (Van den Berg 2016). They are simply ignored.