Taxation Law

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

1TAXATION LAW
Question 1
Issue
Helen has been acquiring funds for the purpose of proceeding with her business in the
field of fashion designing. The funds that she needs to gather for the same, she resolved to
gather them from the sale of several assets she has possessed. These sales of the assets the has
possessed has accrued certain CGT implications in the incidence of taxation. Form the
provided scenario, the following issue can be drawn out:
1. Capital Gain Tax regarding antique impressionism painting;
2. Capital Gain Tax regarding historical sculpture;
3. Capital Gain Tax regarding antique jewellery piece;
4. Capital Gain Tax regarding picture.
Rule
Section 102.20 of the Income Tax Assessment Act 1997: a CGT gain or a CGT loss is said
to have accrued with the happening of a CGT event. A CGT event implies a situation where a
transaction relating to CGT asset has happened.
Section 104.10 of the Income Tax Assessment Act 1997: the CGT event that involves a
transaction where a sale of a CGT asset takes place is categorised as an A1 category of CGT
event.
Post-CGT and Pre-CGT asset: to be considered as a CGT asset the asset needs to be
acquired at a period before the date 20.09.1985. Any asset acquired prior to this date will be
disregarded to be treated as a CGT asset being a pre-CGT asset and a proceed from the same
will not be included in the CGT assessment. Only the post – CGT assets will be considered in
this respect.

2TAXATION LAW
Section 108.10(2) of the Income Tax Assessment Act 1997: collectible implies an item
possessed by the taxpayer to be used for personal purposes and enjoyment. This covers
artwork, jewellery, rare folio, coin and other antique objects.
Section 118.10(1) of the Income Tax Assessment Act 1997: the collectibles whose price is
under the threshold of $500, will not be included in the assessment of CGT. Only those assets
the worth of which exceeds the $500 threshold, will be treated as a component in the CGT
assessment.
Section 110.10 of the Income Tax Assessment Act 1997: the collectible whose value is
less than $500 will not be permitted as a CGT asset and will be allowed as an exemption from
the computation of CGT.
Section 108.10 of the Income Tax Assessment Act 1997: a loss occurred to a taxpayer in
relation to a transaction that involves the collectible as a CGT asset by virtue of a CGT event
is required to be allowed as an offset against the CGT event concerning a collectible only. No
other CGT gain can be subjected to the offset that has been accrued from CGT loss
concerning collectible.
Section 108.20 of the Income Tax Assessment Act 1997: the CGT assets which are held
by the taxpayer for personal use will be permitted to be assessed as a CGT asset only of its
value is more than $10000. If the value of such a CGT asset fails exceed that limit, the same
will not be treated to be a CGT asset for the purpose of CGT assessment.
Application
In the present case, as certain assets has been disposed off by Helen with a view to gather
funds for assisting her fashion designing venture initiation. All these have accrued certain
CGT consequences. These consequences can be summarised as follows: