Taxation Theory Practice and Law - Assignment

Taxation Theory
Practice and Law

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
Analysing net capital gain and losses of client as on 30th June 2017..........................................1
QUESTION 2.................................................................................................................................10
Car provided to employee.........................................................................................................10
Fringe Benefit as Loan..............................................................................................................11
FBT charged on goods sold to Jasmine at low cost..................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Taxation in an economy plays main role for the growth, development and bringing capital
stability in global market. Thus, it is necessary that one country must have a well-managed and
governed taxation office. In the present report, there will be discussion based on various tax
consequences such as Capital Gains Tax (CGT) and Fringe benefit Tax (FBT) which were being
analysed for determining the income tax. Thus, it has been imposed by federal government on
the taxable income from organisation or citizens in Australia. Moreover, after analysing taxable
determination, there will be suggestions and advices will be presented to clients for claiming
exemptions and reducing the taxable liabilities.
QUESTION 1
Analysing net capital gain and losses of client as on 30th June 2017
Capital Gain Tax:
Capital Gains Tax (CGT) is generally applied to capital gain which is prepared for asset's
disposal in context of specific exemptions. It has been operated through treating capital gains as
income which is taxable in tax year where asset is disposed of or sold. The losses could be easily
offset but not in favour of capital gains (Edmonds, 2015). The net capital losses in specific tax
year could not be offset against income (normal) but might be carried forward.
Moreover, this is a gain which has been obtained by an individual with respect to
acquisition and disposing of any asset. Thus, the costs of purchasing an asset as well as make
them sell on different amount will bring the gain or losses through such transaction. Thus, it can
be analysed and levied on various assets such as real estate property, personal and capital assets,
etc. There have been various provisions and norms which were being awarded by Australian
Taxation office which have reflected the positive outcomes (Burkhauser, 2015). In addition,
these gains will be charged and payable by an individual as these are the part of income tax.
Moreover, CGT in Australia will be comprised of 3 methods such as:
Indexation Method:
This provision was made on 21st September 1999 that reflects if an asset which was being
purchased after this date and will be disposed-off after completing period of 12 months than it
will be charged on indexation basis. It will be by increasing the cost base as applicable in the
indexation factor that has been based on consumer price index till September, 1999.
1

Discount Method:
This method will be applicable on assets which were being hold by an owner more than
the period of 12 months (Evans, 2015). In this, the gain of losses derived after disposing off an
asset will be 50% discounted. Therefore, on this, an individual has to make payments of 33.33%
of taxable liabilities.
Other method:
Calculation has been levied on the assets which were hold by an owner for less than 12
months of period as this took cost base away from the sale price (tax, 2018).
With reference to sell real estate, shares and properties where capital losses and gains are
directly listed on return of income tax are identified. All taxes were identified and beneficial for
appropriate administration of losses and gains. The provision of 20th September 1985 has
influenced for insisting about not levying any charges on personal asset. Hence, there are various
exemptions such as home, car and furniture for personal application. It will not be providing any
allowances on the basis of asset's depreciation along with fittings and furniture associated with
rental property. In the same context, items are listed below and different analysis of CGT tax are
identified with different assets such as bed, violin, shares and land.
(a) Block of Vacant Land
2