Taxation Law

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

1TAXATION LAW
Question 1
In the present circumstances, Helen desired to proceed with her fashion designing business
and to fund the same, he has decided to sell some of her assets.
Issue 1
The first transaction in that furtherance involves the sale of an antique impressionism
painting, which has been acquired by her father for an amount of $4000 in the month of
February in the year 1985, for an amount of $12000 on December 2018.
Rule
A CGT gain or loss is said to have accrued, when a CGT event takes place causing a gain
or loss to the individual paying the tax. This has been provided u/s 102.20 of the ITAA 97.
For the purpose of rendering an event as a CGT event, the involvement of a CGT asset in the
transaction is required. The CGT event, which involves the transfer of a CGT asset by way of
sale, will be regarded as an A1 category CGT event u/s 104.10 of the ITAA 97. However, to
be rendered as a CGT asset, the individual paying the tax is required to have purchased the
same on or after the 20th of September 1985. Any asset, which has been purchased prior the
prescribed date, will not be subjected to the treatment of CGT asset and will be excluded
while computing CGT liability.
Application
In the instant situation, Helen has made a sale of an antique painting, which has been
acquired by her father for an amount of $4000 in the month of February in the year 1985, for
an amount of $12000 on December 2018. This will be treated as a CGT gain as it is said to
have accrued, when a CGT event of selling the painting has took place causing a gain to
Helen u/s 102.20 of the ITAA 97. There was a CGT event, which the involved the painting
that is a CGT asset. This CGT event, which involves the transfer of a CGT asset by way of

2TAXATION LAW
sale, will be regarded as an A1 category CGT event u/s 104.10 of the ITAA 97. However, to
be rendered as a CGT asset, the individual paying the tax is required to have purchased the
same on or after the 20th of September 1985. As the painting has been purchased on
December 1993 it has been a post- CGT asset and will be included.
Conclusion
Hence, her CGT consequences will be as above.
Issue 2
She also made a sale of a historical sculpture for an amount of $6000, which she acquired
December of 1993 for an amount of $5500.
Rule
Collectible has been defined u/s 108.10(2) of the ITAA 97 as any item that a person owns
and uses in a personal capacity. A collectible includes any artwork, coin, jewellery, antique,
rare folio, book, medallion, manuscript, first day cover as well as postage stamp. However,
only a collectible, which is worth more than $500 will be taxable under CGT u/s 118.10(1).
The collectible costing less than the prescribed threshold will be disregarded to be taxed as a
CGT asset u/s 110.10 of the ITAA 97.
Application
Helen has made a sale of a historical sculpture for an amount of $6000, which she
acquired December of 1993 for an amount of $5500. This needs to be treated as a collectible
as has been defined u/s 108.10(2) of the ITAA 97 as any item that a person owns and uses in
a personal capacity. A collectible includes any artwork and being a historical sculpture this
will be included. However, the sculpture is worth more than $500 so it will be taxable under
CGT u/s 118.10(1). The collectible costing less than the prescribed threshold will be
disregarded to be taxed as a CGT asset u/s 110.10 of the ITAA 97.