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Taxation Theory, Practice and Law Doc

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TAXATION THEORY, PRACTICE& LAW
Taxation Theory, Practice and Law Doc_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1Determining the net capital gain of client as on 30 June 2018...............................................1QUESTION 2...................................................................................................................................2Advising Jasmine in analysing FBT on various assets...........................................................2Analysing the tax consequences as per loan amount will be used by Jasmine in purchasingsecurities.................................................................................................................................5CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................8
Taxation Theory, Practice and Law Doc_2
INTRODUCTIONTaxation practices and analysis has been based on considering various laws and regulationwhich are in favour of bringing fair tax practices in economy. In Australia taxation practices andregulation has been governed by two authorities such as Federal registrar of legislation andAustralian taxation office. In the present report, with the influences of these two authorities therewill be determination of taxable provision of various cases with reference to capital gain tax andfringe benefit tax. Moreover, there will be fruitful suggestions awarded to the clients with properlegal references and advices.QUESTION 1Determining the net capital gain of client as on 30 June 2018Capital gain tax is one of the most important and beneficial technique which helps inidentifying the tax payable by an organisation with respect to their assets. Thus, these are theassets which have been bought and sold in a certain period on which ATO have various rulingsand provision to charge taxes. In the below listed measurements there were various assets whichhave been bought by the client and sold (Bajada, 2017). The taxable administration was made inrespect with the CGT provisions and rates which have been charged against it.Block of Vacant LandAccording to Australian Taxation Office if anyone has acquired a vacant land, it will beconsidered as capital asset which is subject to capital gain tax (CGT) when the land is sold. Butin case if land is purchased for taking use in business or to conduct profit making activity thatdeals with land, any sales proceeds would be considered as ordinary income and registration ofthe same should be done for goods and services tax (GST).Tax deductions may be claimed if vacant land is bought with the intension to build arental property on it.Land as capital assetVacant land which is held as a capital asset is subject to the same capital gain tax rules asother properties (Vacant land, 2018). These expenses cannot be claimed as income taxdeductions because the land is not generating any income instead of that, these expenses could beadded to the cost base of the land for the purpose of calculating capital gain or loss when it issold.1
Taxation Theory, Practice and Law Doc_3
Building a rental property in vacant landIf a land is bought with the intention of building a dwelling to rent, it may enable one toclaim tax deductions such as loan interest, other ongoing holding costs and council rates. Toassess these deductions, one must ensure active and genuine steps of undertaking dwelling andmake it available for rent as soon as it is completed.Interpretation: Client signed a contract to sell the house in current year on 3/06 for $3,20,000 which wasacquired by her in January 2001 for $1,00,000 and incurred expenses of water and sewerage for$20,000 which would be payable to her only (Braverman, Marsden and Sadiq, 2015). So, bysubtracting non indexed cost base price with selling price of house i.e. 3,20,000-1,20,000. Thecapital gained that was obtained will be 2,00,000, as the property was purchased after 11: 45 amon 21st sept. 1999, the discount model will be applicable in the calculation of capital gaintaxation i.e. 50% of the capital gained will be charged to ta (50% * 2,00,000=1,00,000). 2
Taxation Theory, Practice and Law Doc_4

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