Taxation Law

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

1TAXATION LAW
Answer 1
Transaction 1
An antique impressionism painting purchased by the father of Helen for a price of $4000
in the February of the year 1985 has been sold by Helen for a price of $12000 in the year
2018. U/s 102.20 ITAA1997 states that any loss as well as gain that is said to be a CGT gain
or loss needs to be accompanied by a transaction relating to CGT assets causing a CGT event.
Disposal of CGT asset is required to be treated as A1 category of CGT event u/s 104.10
ITAA1997. However, only those assets that has been purchased or owned by a person in a
date succeeding 20/09/1985 will be treated as a CGT asset and prior to that date no asset
activate will be treated as a CGT asset. In the instant transaction the painting has been bought
by Helen’s father prior to the prescribed date that is required to be complied with for the
purpose of being rendered as a CGT asset. Although it can be stated as a CGT asset and can
be categorised in A1 category of CGT events but the same cannot be treated assessable under
the CGT for the purpose of being acquired prior to the prescribed date. Hence this transaction
will be disregarded for the purpose of CGT computation.
Transaction 2
A historical sculpture husband sold by Helen photo price of $6,000, which has been
required for $5,500 on December 1993. The definition of the word collectible is given u/s
108-10(2) ITAA1997. It includes any item that is held by a person for the purpose of personal
enjoyment. This covers any artwork, jewellery, antique object or certain other similar items.
Again collectible is only II taxable under the CGT if the same has a price exceeding $500 as
per s 118.10 ITAA1997. Any collectible that does not exceed prescribed amount will be
construed as an exempt from CGT computation u/s 110-10 ITAA1997. The sculpture has
been acquired in 1993 which is after the prescribed date and hence is regarded as eligible for

2TAXATION LAW
being allowed as a collectible, which constitutes of CGT asset. Again the price of the same
has exceeded the prescribed limit for the purpose of making a collectible taxable. To be more
precise the price for which the sculpture has been acquired is $5,500. Hence, it can be said
that by applying s 118-10 ITAA1997 it can be treated as a CGT asset and consequently will
be allowed as a component of CGT computation.
Transaction 3
Another sale made by Helen involves the antique jewellery that she acquired in the year
1987 for a price of $14000 and for a selling price of $13,000. U/s 108-10 ITAA1997, a loss
that is sustained by a taxpayer in a transaction with respect to collectibles is required to be
considered as offset. However the treatment of such a loss as an offset is required to be
affected only against CGT gain that has been accompanied by a collectible transaction only.
The loss sustained by the taxpayer with respect to a collectible cannot be treated as an offset
against any other CGT asset other than collectible gain. In this transaction jewellery is
required to be treated as a collectible. It is taxable as it has been acquired after the prescribed
a date of CGT introduction as well as the same has exceeded threshold of $500. Being a
collectible and making the taxpayer sustaining a loss will render the loss to be treated as an
offset against a collectible gain only. In the present situation the only collectible transaction is
the transaction with respect to the historical sculpture and hence the loss accruing from the
sale of the Jewellery will required to be treated as an asset while computing the CGT of the
historical sculpture.
Transaction 4
A picture that has been acquired in the year 1987 for a price of $470 has been sold by
Helen for a price of $5000 in the year 2018. CGT asset that are used for the purpose of
personal use is required to be subjected to CGT u/s 108-20 ITAA1997. Any such asset, if
exceeds the price of $10000 will be regarded as a CGT asset and will be subjected to CGT