Taxation Consequences of Selling Antique Painting, Historical Sculpture, Antique Jewellery, and Picture

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

1TAXATION
Question 1
1
Capital gain tax consequences surrounding the sale of antique painting which Helen has
made.
Any dealings that involves a transaction disposing of antique painting will be required to
included in the assessment as a collectible which is a CGT asset in section 108-10 ITA Act
97. Any CGT gain or CGT loss evolving from a particular transaction provided in section
102-10 of the ITA 97 needs to be appended with a CGT event as the provisions of section
104-5 of the ITA Act 97. Out of the various categories relating to capital gain events the sale
of assets will come under the A1 category pertaining to the list of capital gain events as
contained in section 104-5 of the ITA Act 97. However the point of time during which the
acquisition has occurred is the time when ownership has been transferred in favour of the
taxpayer as per section 109-5 of the Act.
The particulars of this case does not specifies the exact time where the acquisition has been
made by Helen in relation to the painting. This inconvenience has occurred as the painting
was actually purchased by the father of Helen. Capital assets will only be regarded as a
component of CGT liability if such an asset has been purchased subsequent to 20-09-1985. If
it can be establish that the acquisition has not been made prior to this date, the asset in
question will be allowed as a CGT asset. The painting can be treated as a collectible as it has
complied with date requirement. A gain or loss of capital origin can be calculated by making
a deduction of the lower of the cost proceed and the cost base from the other one. The cost
base of the painting is $4,000. Again the painting was acquired by Helen’s father and Helen
has assumed ownership either by succession or gift. This will require the cost base to be
adjusted with respect to the market value of prevailing at the time of acquisition. The capital

2TAXATION
proceed accrued was $12,000. Moreover, a discount of 50% for holding the asset for more
than one year has also been allowed.
2
Capital gain tax consequences surrounding the sale of historical sculpture which Helen has
made.
Any dealings that involves a transaction disposing of historical sculpture will be required to
included in the assessment as a collectible which is a CGT asset in section 108-10 ITA Act
97. Any CGT gain or CGT loss evolving from a particular transaction provided in section
102-10 of the ITA 97 needs to be appended with a CGT event as the provisions of section
104-5 of the ITA Act 97. Out of the various categories relating to capital gain events the sale
of assets will come under the A1 category pertaining to the list of capital gain events as
contained in section 104-5 of the ITA Act 97. However the point of time during which the
acquisition has occurred is the time when ownership has been transferred in favour of the
taxpayer as per section 109-5 of the Act.
The particulars of the case suggest that the sculpture has been purchased in the month of
December of 1993. Capital assets will only be regarded as a component of CGT liability if
such an asset has been purchased subsequent to 20-09-1985. If it can be establish that the
acquisition has not been made prior to this date, the asset in question will be allowed as a
CGT asset. The sculpture can be treated as a collectible as it has complied with date
requirement. A gain or loss of capital origin can be calculated by making a deduction of the
lower of the cost proceed and the cost base from the other one. The cost base of the sculpture
is $5500. The capital proceed accrued was $6000. Moreover, a discount of 50% for holding
the asset for more than one year has also been allowed. The capital gain in this case is $500.
3