Taxation

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

1TAXATION
Answer 1
a)
The issue that is evident from the present case is the capital gain tax implication of the
transaction involving the sale of antique painting by Helen.
The transaction with respect to the antique painting involved in this case will be assessed
under taxation as a collectible which implies a CGT asset under section 108-10 of the
ITAA1997. Any CGT implication whether a loss or a gain under section 102-10 of the
ITAA1997 needs to bundle up with a CGT event as enumerated under section 104-5 of the
ITAA1997. As per the several categories of CGT events enumerated under section 104-10 of
the ITAA1997 the sale of an asset with an objective to effect its disposal will be treated as in
A1 category of CGT events. The question that arises as to the timing of the acquisition of a
CGT asset lies in the conferring of the ownership of this asset upon the taxpayer as concluded
in section 109-5 of the ITAA1997.
In the instant scenario the time at which the acquisition has been effected in relation to the
painting by Helen has not been provided clearly. The ambiguity regarding the time of
acquisition has arisen because of the fact that the painting has actually been acquired by
Helen’s father. The painting will only be rendered as a CGT asset if it has been acquired on a
date succeeding 20-09-1985. Any asset of capital nature will not be included in the
computation of CGT, if the same has been acquired on a date prior to the prescribed one. As
it is evident from the given situation that the painting has been compliant with all the date
requirements it will be treated under the CGT implications as a collectible. In such case the
net capital gain or loss will be computed by finding the difference between the cost proceed
and the cost base. The cost base of the painting will imply the first element of the cost base
that is the acquisition price amounting to $4,000. The time of the acquisition being not

2TAXATION
evident as the painting has been purchased by her father and been conferred by the either
through succession or gift the acquisition price needs to be adjusted in accordance with the
market value existing at that time. The capital proceed however has amounted to 12000
dollars and being held asset for more than 1 year of 50% discount will be allowed on the total
CGT availability.
b)
The issue that is evident from the present case is the capital gain tax implication of the
transaction involving the sale of historical sculpture by Helen.
The transaction with respect to the historical sculpture involved in this case will be assessed
under taxation as a collectible, which implies a CGT asset under section 108-10 of the
ITAA1997. Any CGT implication whether a loss or a gain under section 102-10 of the
ITAA1997 needs to bundle up with a CGT event as enumerated under section 104-5 of the
ITAA1997. As per the several categories of CGT events enumerated under section 104-10 of
the ITAA1997 the sale of an asset with an objective to effect its disposal will be treated as in
A1 category of CGT events. The question that arises as to the timing of the acquisition of a
CGT asset lies in the conferring of the ownership of this asset upon the taxpayer as concluded
in section 109-5 of the ITAA1997.
In the instant scenario the sculpture has been acquired by Helen on December 1993. The
sculpture will only be rendered as a CGT asset if it has been acquired on a date succeeding
20-09-1985. Any asset of capital nature will not be included in the computation of CGT, if
the same has been acquired on a date prior to the prescribed one. As it is evident from the
given situation that the sculpture has been compliant with all the date requirements it will be
treated under the CGT implications as a collectible. In such case the net capital gain or loss
will be computed by finding the difference between the cost proceed and the cost base. The