Tax Implications of Land Sale with Timber
Added on 2020-04-07
9 Pages2420 Words389 Views
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Taxation Theory, Practice & Law
TABLE OF CONTENTSQuestion 1..................................................................................................................................3Issue........................................................................................................................................3Legal provisions for taxation.................................................................................................3Application and conclusion....................................................................................................3Question 2..................................................................................................................................3Issue........................................................................................................................................3Legal provisions for taxation.................................................................................................3Application and conclusion....................................................................................................3Question 3..................................................................................................................................3Issue........................................................................................................................................3Legal provisions for taxation.................................................................................................3Application and conclusion....................................................................................................3Question 4..................................................................................................................................3Principle established in IRC v Duke of Westminster [1936] AC 1.......................................3Relevance of this principal in Australia.................................................................................3Question 5..................................................................................................................................3Issue........................................................................................................................................3Legal provisions for taxation.................................................................................................3Application and conclusion....................................................................................................3References..................................................................................................................................4
QUESTION 1IssueIn the described scenario, Eric was engaged in purchase and sale of various capital assets. Byconsidering those transactions computation of capital taxation is done in this part.Legal provisions for taxationIn accordance with the capital taxation provisions of Australia different method is applicableon the basis of holding period of asset(Faccioand Xu, 2015). Description and condition of itsapplicability is as follows:Indexation and discounting method: One of these methods is applied if assesse holdcapital assets for more than twelve months.Other method: This method is applied if assesse hold capital assets for less thantwelve months(Jacob, 2016).Application and conclusion In the present case other method will be applied as it is clearly provided that assets arepurchased and sold in previous 12 month thus it is obvious that holding of each asset will beless than 12 months. Computation of capital gain for tax is as follows:AssetPurchase costSales priceCalculationSales-purchasecost Net AmountCapital gainAntique Vase$2,000.00$3,000.00$3,000.00-$2,000.00$1,000.00Shares$5,000.00$20,000.00$20,000.00-$5,000.00$15,000.00$16,000.00Capital LossAntique chair$3,000.00$1,000.00$1,000.00-$3,000.00-$2,000.00Painting$9,000.00$1,000.00$1,000.00-$9,000.00-$8,000.00Sound system$12,000.00$11,000.00$11,000.00-$12,000.00-$1,000.00-$11,000.00Net CapitalgainTotal Capital gain - Total Capital loss$16,000.00--$11,000.00$5,000.00
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