Taxation Law

Running head: TAXATION LAW
Taxation Law
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1TAXATION LAW
Table of Contents
Answer 1:......................................................................................................................2
Answer 2:......................................................................................................................3
Answer 3:......................................................................................................................5
Conclusion:...................................................................................................................6
References:..................................................................................................................7

2TAXATION LAW
Answer 1:
Tax charged on Capital Gain for antique impressionism painting:
As per “sec 100-25 (1), ITAA 1997”, tax imposed on capital gains is
restricted on assets on which it is applied. Moreover, according to the section, the
tax is limited on those products which are bought on the 20th September, 1985. The
real gains, which are made, are applied only up to 21st September 1999, for tax
regarding the regimes of capital gains tax (Afonso and Alves 2018). For this reason,
the cost base related to assets of the capital gains tax was indexed for inflation when
the CGT asset, which was hold for more than 12 months, was sold. However, assets
that were bought before 20th September of 1985 and gained after that are not
accountable for CGT as these are exempted assets.
In this context, Helen purchased antique painting on February 1985 which
was before 20th September, 1985. Hence, the purchase was done before the
implementation of the capital gain tax regimes. On the other side, this painting was
sold in December 2018. The purchasing price of this painting was $4000 while it was
sold for $12000. Therefore, the sale of painting had helped Helen to experience
capital gain. The asset is known as pre CGT assets as it was bought before the
introduction day and consequently the capital gains for Helen was exempted in this
context.
Capital Gain Tax related to historical sculpture:
The CGT provision is on the realised or actual gains. As per “sec 102-5 (1)”,
the capital gains for a taxpayer are taxable in the form of statutory income and this is
included in the assessable earnings as well. On the other side, “Sec 104-10, ITAA
1997” is related with the disposable of CGT asset. The event A1 regarding CGT
happens when the CGT related assets are sold (Jacob 2018). Some listed items
under “sec 108-10 (2), ITAA 1997” are antiques, rare books, sculptures and
jewellery, which are used for the purpose of personal enjoyment.
In 1993, a sculpture, which was an art work, was bought by $5500 by Helen,
who sold it again in 2018 for $6000. The sculpture is described as the collectable
item related to “sec 108-10 (2), ITAA 1997”. The selling process of the sculpture
has increased CGT event A1 based on “sec 104-10, ITAA 1997”. The capital gains,
which are made over here, are known as taxable in the form of statutory income
regarding “sec 6-10”. Depending on “sec 102-5 (1)”, this capital gains will be
considered as assessable income of Helen.
Tax on capital gain related to antique jewellery piece:
From “sec 108-10 (1), ITAA 1997”, it is seen that the capital loss happened
from any collectables are quarantined and this can e offset only against the capital
gains that happened from other collectables. This indictes that leftover amount from
capital loss can be carried forward for futures with the help of “sec 108-10 (4)”
(Bentley 2019). In this situation, Helen has purchased the jewellery by paying 14000
and sold it on 20 March 2018 by losing $1000 from the purchased price. By following
the quarantined rule under “sec 108-10 (1), ITAA 1997”, it is said that the capital
loss needs to be quarantined. Furthermore, such can be offset beside capital gain,
occurred from sculpture. Based on “sec 108-10 (4), ITAA 1997”, it is observed that