Taxation Theory, Practice & Law

Taxation Theory, Practice & Law

Table of Contents
Question 1: The goods and services tax (GST).................................................................3
Introduction...........................................................................................................................3
Description of GST credit:..................................................................................................3
Identification of legal issues and relevant taxation laws:..............................................4
Succinct application of tax law to material facts:............................................................4
Conclusions:.........................................................................................................................5
Question 2: Capital gains tax (CGT)....................................................................................6
Introduction...........................................................................................................................6
Description of Capital gains tax (CGT):................................................................................6
Identification of legal issues and succinct application of relevant tax law to material
facts:......................................................................................................................................7
Sale of a block of land for $1,000,000:............................................................................7
Sale of Emma’s 1000 shares in Rio Tinto for $50.85 per share:.................................8
Sale of a stamp collection Emma had purchased, from a private collector, in
January 2015 for $60,000:.................................................................................................9
Sale of a grand piano for $30,000:...................................................................................9
Conclusion:.........................................................................................................................10
Reference:..............................................................................................................................11

Question 1: The goods and services tax (GST)
Introduction
The first part deals with the consequences of goods and service tax (GST) in the
context of the case study of The City Sky co. It focus on the legal issues relevant to
taxation law and GST credit, identification of material facts with respect to GST
aspect along with the application of tax laws to material facts succinctly. It also
covers if GST credit applicable in case of wage payment made to lawyer.
Description of GST credit:
An input tax credit or GST credit can be claimed by a business organization when
the GST is included in the price of goods & services or the inputs that are being
bought for utilizing those inputs for business purposes only.
The GST credit refers to the fact that if a business organization makes some
purchase of goods and services that are to be utilised for business purpose only and
if the business has acquired those goods and services at a GST inclusive price
where the total monetary value of the GST inclusive price is higher than A$82.50,
then the business is entitled to claim credit or exemption for the GST included in the
price of those inputs being purchased ("Claiming GST credits", 2019).
Identification of material facts regarding The City Sky Co goods and services
taxation aspects:
In the present scenario the business organization City Sky Co which is GST
registered is looking for building 15 apartments on a vacant piece of land south of
Brisbane. The apartments are being built for selling them out in future.
As City Sky Co is GST registered then the business is entitled to claim GST credit on
the supply price of inputs or goods & services that are to be purchased for business
purpose provided that the supply price of inputs or goods & services are including
the GST and the inputs are being supplied by a supplier who is also registered for
GST.
In addition to that it is being assumed that City Sky Co is keeping the invoices of
purchases of inputs that are being purchased from a GST registered supplier who is

supplying the inputs at a GST inclusive price("Wondering what an input tax credit
is?",2019).
Identification of legal issues and relevant taxation laws:
A business organization can claim for GST credit on purchase of goods and services
or inputs that are going to be solely used for business purpose provided both the
purchaser of input as well as supplier of inputs are GST registered and the invoice
containing GST inclusive price of inputs is higher than A$82.50.
However the business will not be able to claim GST credit on GST inclusive
purchase price of goods and services provided the inputs are to be used in some
private purpose and either purchaser or both the purchaser or the supplier are not
registered for GST.
The purchaser for goods and services will not be entitled to GST provided the input
price of GST free (like the ingredients of basic food) and if the input purchased is
input taxed.
Input tax credit or ITC cannot be claimed in case of the purchase of the following
items;
On purchase of vehicles used for transportation
On purchase of Food, beverages& club membership services
On purchase of insurance, repair and maintenance services
On hiring of work contract services
On purchase of inputs to be used for construction of immovable properties where the
constructions are to be done in own account of the ‘purchaser of inputs
On Wages paid to the staff ("When you cannot claim a GST credit", 2019)
Succinct application of tax law to material facts:
But here the organization City Sky Co is purchasing the inputs at a GST inclusive
price where the inputs are to be used for manufacturing building apartments which
can be categorised as immovable property to be prepared in the own account of the