Taxation Law

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

TAXATION LAW1
Table of Contents
Introduction:...............................................................................................................................2
Tax Implications involving the sale of house:...........................................................................2
Tax consequences of legal fees:.................................................................................................3
Computation of taxable income:................................................................................................4
Conclusion:............................................................................................................................6
References:.................................................................................................................................7

TAXATION LAW2
Introduction:
The report would take into the consideration the tax consequences for Chris Matthews
for the transactions reported by the taxpayer received from numerous sources. The report
would consider receipt of income and outgoings that are incurred by taxpayers from
employment and personal consultancy business (Braithwaite and Reinhart 2019). Added
emphasis would be placed towards capital gains derived from disposal of main dwelling and
legal fees that was occurred for defending the legal charges.
Tax Implications involving the sale of house:
The ATO explains that a taxpayer should disregard the capital gains that is derived
from the sale of the main residence. However, the taxpayers are not entitled to get the full
exemption from the capital gains derived from the sale of main residence if the house has
been used for producing income such as renting out or running a business (Butler 2019). To
determine the net value of capital gains, the taxpayer must ascertain the market value of the
dwelling home especially the time when the taxpayer used the dwelling for deriving income.
Chris purchased the property on 1st March 1999 and he used it for generating revenue
on 3rd July 2014. On the 19th June 2018 Chris ultimately sold the property for $1,000,000.
Chris used the house as the main residence throughout the ownership. For a certain period of
time Chris used a portion of dwelling for running his personal consultancy business. The
rooms were modified by Chris to make it appropriate for business purpose and the rest of the
part was used for private purpose. The business use included 5% of the total floor space.
Upon selling the house, Chris made the capital gains of $572,000. As Chris has used the
house for running his own private consulting business he will only be permitted to obtain the
partial main residence exemption from the CGT (Sadiq 2019). Furthermore, the property was
within the ownership of Chris for a minimum period of 12 months. Chris can use the CGT