Taxation Law

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

TAXATION LAW1
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to Question 2:................................................................................................................6
References:.................................................................................................................................9

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Answer to question 1:
A: The capital gain in relation to family home:
Capital gains tax can be defined as the set of rules that are mainly designed to
compute the capital gains that would be levied for tax under the income tax regime for the
sale of capital asset. Capital gains tax is not viewed as the separate tax (Jones 2015). The
legislation of CGT was introduced during 20th September 1985 with the objective of
imposing tax on gains that are made from the sale of assets purchased on or following the
date. Assets which are purchased before the 20/9/1985 are termed as the Pre-CGT asset and
gains that are originated from the sale of those assets are termed as non-taxable.
Accordingly, under the “sec 118-110, ITAA 1997” the main residence of the taxpayer
comprises of the dwelling that is exempted from capital gains tax (Grudnoff 2016). A
taxpayer is allowed to obtain the partial main residence if they subdivide and sell any part of
the property or they use the house for generating assessable income.
The case study states that Jasmine purchases a home in 1981 for $40,000 which
currently worth’s $650,000 at the time of sale. The house has been the main home of
residence for Jasmine from day when the interest of ownership was formed till the last day of
disposal. The main residence of Jasmine can be classified as the pre-CGT asset because the
house was bought in 1981 which is before the CGT legislation date of 20/9/1985. As a result,
the house will be regarded as the pre-CGT asset and gains made from the sale of home will
be is exempted from CGT,
B: Capital gain from the sale of car:
Under the “subdivision 108-C” personal use assets mainly includes the use of assets
that are completely for private purpose (Yuan 2016). The capital gains that are made from the

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sale of personal use assets is ignored if the assets has been acquired for lower than $10,000.
While under subdivision 108-C a loss derived from the personal use asset is completely
ignored. When a sale of assets takes place then there is a “CGT event A1” under “sec 104-10
(1), ITAA 1997”. Under “CGT event A1” a capital gain or loss is made.
A car was purchased by paying a purchase price of $31,000 in 2011 by Jasmine. The
car was eventually sold for $10,000. Under “subdivision 108-C” the car has been classified
as the personal use asset because Jasmine used the asset for her personal purpose.
Furthermore, the sale of car has led to “CGT event A1” under “sec 104-10 (1), ITAA 1997”
(Evans, Minas and Lim 2015). As noted, upon selling the car Jasmine suffers a loss. Under
the “subdivision 108-C”, the loss from sale of personal use car should be disregarded by
Jasmine.
C: Capital gains in relation to sale of business:
In order to qualify for the small business CGT concession, an entity must meet the
basic conditions for all the concessions (Ingles and Stewart 2015). This includes satisfying
any one of the following;
a. The entity was a small business entity with turnover of less than $2 million
b. An individual may not conduct its business but the CGT assets is used in business by
small business entity
c. An individual is the partner in the partnership entity which is a small business and the
CGT asset forms the interest in the partnership or the asset owned is used in
partnership business (Pope 2013).
To assist the small business on meeting the basic conditions, capital gains can be
lowered by applying numerous concessions listed under the “subdivision 152-A, ITAA
1997”. There are four available small business concessions;