Capital Gain Tax Consequences on Sale of Collectibles and Income from Personal Exertion

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

TAXATION1
1
Transaction 1
The question arising from the instant scenario is the assessment of the capital gain tax
consequences accrued from the sale of antique impressionism painting affected by Helen.
The antique impressionism painting in connection with this situation needs to be depicted as a
collectible and the assessment of the same is to be done as CGT asset as per section 108.10 of
the ITA Act 1997. A CGT event under section 102.2 of the ITA Act 1997 is said to occur
when it can be brought under any of the category of events mentioned in section 104 of the
ITA 1997. Any CGT event that arises in connection with disposal of a CGT asset by way of
sale is required to be assessed as a CGT event of A1 category as contained in section 104.10
of the ITA 1997. The exact time at which the CGT asset concerned is acquired is to be treated
as the time at which the individual paying the tax take the ownership under section 109.5 of
the ITA 1997.
The present scenario is not very clear regarding the time of acquisition of the painting by
Helen. This is because the facts of the case provides the painting being acquired by Helen’s
father. The painting or any transaction relating to the same will only be included in the CGT
computation if the same has been acquired subsequent to 20.09.1985 and is required to be
treated as a collectible. The painting in this situation has a cost base of 4000 dollars under
section 110.25 of the ITA 1997 which is the first element of the cost base. In the given
scenario the painting might have obtained by Helen by way of succession or gift. Hence there
should be a modification in relation to the cost base according to the market value of the
painting while making the acquisition under section 112. 20 of the ITA 1997. Under section
116.20 of the ITA 1997, the sale price of 12000 dollars will be considered as the cost proceed
and the CGT gain will be computed by obtaining the difference between the cost proceed and

TAXATION2
the cost base. An additional discount of 50% under div 115 will also be available to Helen if
the asset has been held for more than 1 year.
Transaction 2
The question arising from the instant scenario is the assessment of the capital gain tax
consequences accrued from the sale of historical sculpture affected by Helen.
The historical sculpture in connection with this situation needs to be depicted as a collectible
and the assessment of the same is to be done as CGT asset as per section 108.10 of the ITA
Act 1997. A CGT event under section 102.2 of the ITA Act 1997 is said to occur when it can
be brought under any of the category of events mentioned in section 104 of the ITA 1997.
Any CGT event that arises in connection with disposal of a CGT asset by way of sale is
required to be assessed as a CGT event of A1 category as contained in section 104.10 of the
ITA 1997.
The present situation presence Helen to have acquired the historical sculptor on December
1993. The sculpture or any transaction relating to the same will be included in the CGT
computation as the same has been acquired subsequent to 20.09.1985 and is required to be
treated as a collectible. The sculpture in this situation has a cost base of 5500 dollars under
section 110.25 of the ITA 1997 which is the first element of the cost base. In the given
scenario the painting might have obtained by Helen by way of succession or gift. Hence there
should be a modification in relation to the cost base according to the market value of the
painting while making the acquisition under section 112. 20 of the ITA 1997. Under section
116.20 of the ITA 1997, the sale price of 6000 dollars will be considered as the cost proceed
and the CGT gain will be computed by obtaining the difference between the cost proceed and
the cost base. An additional discount of 50% under div 115 will also be available to Helen if
the asset has been held for more than 1 year.