Taxation Practises

TAXATION PRACTISES

Contents
Introduction...........................................................................................................................................2
Answer-1...............................................................................................................................................2
Answer-2...............................................................................................................................................5
Answer-3...............................................................................................................................................7
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10

Introduction
The report considers a discussion on taxation theory and practises for evaluating the
individual income. The report will include three questions that is most relevant to taxation
theories for the application of laws in Australia. The discussion will carry on capital gain tax
situations of the Helen account transaction on capital gain (Paris, 2017). Moreover, the
discussion will consider Barbara`s income from his personal work. Apart from this, the report
will consider assessment of income of Patrick (Paris, 2017).
Answer-1
By considering the taxation policy and theory of Australia, calculation of capital gain is
defined as when selling and disposing off the immovable and movable property is more than
purchasing price of the assets (Cobiac, Tam, Veerman, and Blakely, 2017). The difference
between the sales price and the cost price of the movable and immovable property. Tax is
related to concerned department when there is a chance to occurrence of capital gain and it is
exempt from the list when capital gain does not occur (Cobiac, Tam, Veerman, and Blakely,
2017). CGT is charged on the basis of income tax of an individual. This signifies that there
will be increase in the burden of taxpayer. However, if the (assesse) bears the whole capital
loss then there will be no provision against setting off in lieu of income (except capital gain)
but this income will be carried forward to the next year as it will be used to set off the losses
(Cobiac, Tam, Veerman, and Blakely, 2017).
Most importantly, assets that are purchased after 20th September 1985 are further entitled to
the taxation of capital gain regime. Until that time, there was no rate specified as the
Australian taxation system (Chardon, Freudenberg, and Bramble, 2016). When the assesse
holds the assets for a time of 12 months or higher. In this case, the capital gain is limited to
the 23.5 percent because of 50 percent of the CGT discount. This discounting benefit is not

given to the companies (Forrest, and Hirayama, 2015). Even though, each asset, which is
purchased before 21 September 1999 can avail the benefit of indexation method. The assesse
can be used any of the two methods that give low tax value. This discount method and the
indexation method can not avail benefit when the asset holds less than 12 months.
Indexation method- This method evaluates the value of acquired expenditure and assets. As
per the method, the calculation is based on dividing the CPI where the asset is integrated in
the quarter. It is calculated to enrich the account encountered on the cost-based inflation for
the asset.
In first case of Helen`s transaction, indexation method has been used because these
transactions are purchased and processed before 21st September, 1999.
1. When the asset has been acquired before 1999 then indexation method will be
applicable while calculating CGT.
Particular Selling price Purchase price Capital gain /loss
Amount ($) 12000 12042 (42)
Working note-
a. Purchase cost= 112.6/61.2
= 1.838*(5500) = 10120.
b. It has been observed that historical sculpture has been sold off for $6000 on 1st
January 2019 that was purchased on December 1993 for $5500. When tax amount on