Taxation Law

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

1TAXATION LAW
Answer 1
Part 1:
The instant case is related to identify the Capital Gain Taxation Consequences due to
the sale of antique painting on 1st December 2018 at the price of 12000 dollars that her father
bought for 4000 dollars. This painting will be regarded as collectable and also a capital gain
asset as given in section 180-10(2) of the Income Tax Assessment Act 1997. When a CGT
event happens, then capital gain CG or capital loss CL will correspond to it. It was
entrenched in section 102.20 of the Act. Section 102.20 enumerates that CGT option is
counted when a CGT event happens in correspondence to table given under section 104-5. In
the same manner, section 104-10(1) provides that in case of disposal or selling of CGT asset,
a CGT A1 event also results. The Tax payer takes the owner’s role when the said asset is
transferred according to section 109-5(1).
As per the facts provided in this case, Helen received painting from her father. In case
she received it prior to 20th of September’ 1985, it will not appear under the provisions of
CGT since it accounts to be a pre CGT asset. However, in case it is received after the before
mentioned date, it will be considered to be a collectable. Cost Base Event 1 as per section
110-25(2) is equal to 4000 $. She received it from her father either as a gift or she inherited it.
Cost Base changes as per the market price of the painting on the date of acquisition date as in
section 112.20 of the said Act.
Capital proceeds = painting’s selling price = $12000 as given in section 116-20.
Capital gain is equal to Capital proceeds minus cost base. In the event of holding the asset for
a period exceeding 1 year, Helen will be liable to get a 50% discount as per Division 115.
Part 2:

2TAXATION LAW
The issue to be determined here is the CGT effect for selling of the sculpture by
Helen.
Helen purchased the sculpture at the price of 5500 dollars and she disposed it by
selling it for 6000 dollars. The sculpture can be depicted as a collectable according to section
108.10 (2) of ITAA. When a CGT event happens, then capital gain CG or capital loss CL will
correspond to it. It was entrenched in section 102.20 of the Act. Section 102.20 enumerates
that CGT option is counted when a CGT event happens in correspondence to table given
under section 104-5. In the same manner, section 104-10(1) provides that in case of disposal
or selling of CGT asset, a CGT A1 event also results. The Tax payer takes the owner’s role
when the said asset is transferred according to section 109-5(1).
In the present case, the sculpture was acquired by Helen on December 1993 when she
made the purchase. Thus sculpture happens to be a post CGT asset. The disposal date
accounts for a CGT E A1 as per section 104-10(1). The Cost Base E1 here is 5500 $= selling
price of sculpture as given in section 110-25(2) of ITAA.
The Capital Gain= CP- CB= Capital Proceeds – Cost Base= 6000 – 5500= 500. The
amount being positive shows that gain is incurred. Thus capital gain of 500 $ is incurred.
From this, it is also revealed that she will be getting discount of 50 % as per Division 115
provision.
Part 3:
The issue to be identified here to identify the CGT effect due to sale of piece of
jewellery by Helen. The jewellery was bought for 14000 $ on October 1987 and disposing it
off for 13000 $ on March 20th, 2018.
The jewellery can be depicted as a collectable according to section 108.10 (2) of
ITAA. When a CGT event happens, then capital gain CG or capital loss CL will correspond