(Solution) Taxation Theory, Practice & Law
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Taxation Theory, Practice
& Law
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Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
a. Block of vacant land...........................................................................................................1
b. Antique bed........................................................................................................................2
c. Painting...............................................................................................................................3
d. Shares.................................................................................................................................4
e. Violin..................................................................................................................................6
TASK 2............................................................................................................................................7
a Advise Rapid-Heat about FBT consequences....................................................................7
b. Variation to answer if the Jasmine used 500000 as share investment................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
a. Block of vacant land...........................................................................................................1
b. Antique bed........................................................................................................................2
c. Painting...............................................................................................................................3
d. Shares.................................................................................................................................4
e. Violin..................................................................................................................................6
TASK 2............................................................................................................................................7
a Advise Rapid-Heat about FBT consequences....................................................................7
b. Variation to answer if the Jasmine used 500000 as share investment................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
INTRODUCTION
Taxation theory is the tax system which is concerned with tax brackets and slabs in order
to ascertain tax liabilities for every individual, company or any other institution. As a tax
consultant in Mayfield, New South Wales Australia, various assets which are sold by the client
are analysed in order to ascertain their net taxable amount. In this project report, solutions for
two case scenarios are provided which are concerned with taxation laws. Various assets along
with their capital gains are calculated in first scenario. In second scenario advices to a company
is provided in order to assisting them in taxation. The main aim of this report is build a
understanding about the concept of taxation law and its practices
TASK 1
Mayfield, New South Wales is an Australian Suburb in which Australian laws are
applicable. As an tax consultant of this region, all the suggestion and advices provided to client
are related with laws of this region. In Australia, there are different taxation laws for variety of
income such as Income tax law, GST law and others. In order to provide solution for below
transactions , Income tax law is used in which various tax regulations such as Capital gain tax
(CGT) and Insurance claim tax are used. As a tax consultant, it has been ascertained that the
client is an investor and antique collector and despite of various investments she is not carrying
any business due to which all taxation rates of an individual will be applicable on her. Total and
net taxation amount of this client is determined by ascertaining solutions for below queries.
a. Block of vacant land
Case Scenario: Client is an investor and antique collector, who has signed a contract to
sell a block of vacant land for 320000 which was acquired for the value of 100000 and additional
20000 which were paid by her for water and land taxes. Selling of a land is kind of capital gain
due to which tax rate of CGT will be applicable to the client.
Related Tax and regulations: From the above case scenario it has been ascertained that
CGT will be applicable on the client. According to these regulations, vacant land is a block of
immovable property which is owned as an investment and was acquired after 20 September
1985. According to Australian Taxation Office, Vacant land that is help as a capital asset is
1
Taxation theory is the tax system which is concerned with tax brackets and slabs in order
to ascertain tax liabilities for every individual, company or any other institution. As a tax
consultant in Mayfield, New South Wales Australia, various assets which are sold by the client
are analysed in order to ascertain their net taxable amount. In this project report, solutions for
two case scenarios are provided which are concerned with taxation laws. Various assets along
with their capital gains are calculated in first scenario. In second scenario advices to a company
is provided in order to assisting them in taxation. The main aim of this report is build a
understanding about the concept of taxation law and its practices
TASK 1
Mayfield, New South Wales is an Australian Suburb in which Australian laws are
applicable. As an tax consultant of this region, all the suggestion and advices provided to client
are related with laws of this region. In Australia, there are different taxation laws for variety of
income such as Income tax law, GST law and others. In order to provide solution for below
transactions , Income tax law is used in which various tax regulations such as Capital gain tax
(CGT) and Insurance claim tax are used. As a tax consultant, it has been ascertained that the
client is an investor and antique collector and despite of various investments she is not carrying
any business due to which all taxation rates of an individual will be applicable on her. Total and
net taxation amount of this client is determined by ascertaining solutions for below queries.
a. Block of vacant land
Case Scenario: Client is an investor and antique collector, who has signed a contract to
sell a block of vacant land for 320000 which was acquired for the value of 100000 and additional
20000 which were paid by her for water and land taxes. Selling of a land is kind of capital gain
due to which tax rate of CGT will be applicable to the client.
Related Tax and regulations: From the above case scenario it has been ascertained that
CGT will be applicable on the client. According to these regulations, vacant land is a block of
immovable property which is owned as an investment and was acquired after 20 September
1985. According to Australian Taxation Office, Vacant land that is help as a capital asset is
1
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subject to the same capital gains tax rules as per other properties. Expenses paid by the client for
acquisition and sale of land can not be claimed as an income tax deduction.
Net capital gain which is earned by the client along with its taxable value is determined
below:
Date Particulars Amount
Jan 2001 Purchase of block of vacant land 100000
Expenses of water, sewage and land taxes on land 20000
Total cost of land 120000
3 June 2017 Contract price of sale of block of vacant land 320000
3 June 2017 Deposit of contract price 20000
3 Jan 2018 Balance payment 300000
Capital gain 200000
Taxable capital gain 20000
Tax rate
19cents per dollars
exceeding 18201
Net tax payable amount 342
Capital gain is the rise in the value of a capital assets which is usually higher than the
value of purchased cost. In this case, in order to determine the value of capital gain Total cost of
land is deducted from total value of sold asset so that difference can be ascertained. Taxable
capital amount is recorded as 20000 and not 200000 as the client has only received 20000 as a
token amount in this taxation year and rest 180000 will be received in next taxation year.
According to the current tax rates any capital amount which is lower than 18201 is non taxable.
Thus, the value of tax amount which 342 is determined using tax rate of 19% or 19 cents per
dollar exceeding 18201.
b. Antique bed
Case Scenario: In this case, client has claimed for insurance for her antique bed acquired
in 1986 amounting 5000 including all expenses. This capital asset was stolen from her house and
at that time value of that asset was 25000. As provided, on 13 November, 2017 client claimed for
the insurance which was rejected commenting that this particular asset was not mentioned in the
2
acquisition and sale of land can not be claimed as an income tax deduction.
Net capital gain which is earned by the client along with its taxable value is determined
below:
Date Particulars Amount
Jan 2001 Purchase of block of vacant land 100000
Expenses of water, sewage and land taxes on land 20000
Total cost of land 120000
3 June 2017 Contract price of sale of block of vacant land 320000
3 June 2017 Deposit of contract price 20000
3 Jan 2018 Balance payment 300000
Capital gain 200000
Taxable capital gain 20000
Tax rate
19cents per dollars
exceeding 18201
Net tax payable amount 342
Capital gain is the rise in the value of a capital assets which is usually higher than the
value of purchased cost. In this case, in order to determine the value of capital gain Total cost of
land is deducted from total value of sold asset so that difference can be ascertained. Taxable
capital amount is recorded as 20000 and not 200000 as the client has only received 20000 as a
token amount in this taxation year and rest 180000 will be received in next taxation year.
According to the current tax rates any capital amount which is lower than 18201 is non taxable.
Thus, the value of tax amount which 342 is determined using tax rate of 19% or 19 cents per
dollar exceeding 18201.
b. Antique bed
Case Scenario: In this case, client has claimed for insurance for her antique bed acquired
in 1986 amounting 5000 including all expenses. This capital asset was stolen from her house and
at that time value of that asset was 25000. As provided, on 13 November, 2017 client claimed for
the insurance which was rejected commenting that this particular asset was not mentioned in the
2
insurance claim. Client has to go for compromise and received 11000 as full settlement for her
claim under household content policy.
Related Tax and regulations: In this case scenario, two laws are applicable. First is
Capital Gain tax under Income tax assessment act, 1997 and second is Insurance Act, 1984.
According to these acts and laws, claims which are received from insurance are typically not
taxable. In this case, client has received insurance claim of 11000 dollars which is not considered
as taxable amount. The insurance claim which is received is not taxable because that value is not
considered as gain, in fact it is considered as an amount of compensation which should be given
against the loss of client.
Determination of insurance claimed amount along with taxable amount is depicted
below:
Date Particulars Amount
21 July 1986 Purchase of antique bed 3500
29 Oct 1986 Alterations charge 1500
Total cost of bed 5000
31 Oct 2017 Price of bed 25000
12 Nov 2017 Bed was stolen
13 Nov 2017 Insurance claim
21 Jan 2018
Insurance claim received under household
contents policy 11000
Taxable insurance claim 0
Tax rate Not applicable
Net tax payable amount 0
From the above table, it can be observed that for the insurance claim amount of 11000
dollars there is no tax payable amount. This is because the amount which is gained is not
considered as capital gains. Total cost of the antique bed includes both purchased amount and
expenses and is a capital asset but after the incident of stolen goods, any realised amount such as
insurance claim will not be liable for taxation under capital goods.
c. Painting
Case Scenario: In this case scenario, client has sold an expensive painting for 125000
dollars which was acquired on 2 May 1985 for 2000 from a well known Australian artist. This
3
claim under household content policy.
Related Tax and regulations: In this case scenario, two laws are applicable. First is
Capital Gain tax under Income tax assessment act, 1997 and second is Insurance Act, 1984.
According to these acts and laws, claims which are received from insurance are typically not
taxable. In this case, client has received insurance claim of 11000 dollars which is not considered
as taxable amount. The insurance claim which is received is not taxable because that value is not
considered as gain, in fact it is considered as an amount of compensation which should be given
against the loss of client.
Determination of insurance claimed amount along with taxable amount is depicted
below:
Date Particulars Amount
21 July 1986 Purchase of antique bed 3500
29 Oct 1986 Alterations charge 1500
Total cost of bed 5000
31 Oct 2017 Price of bed 25000
12 Nov 2017 Bed was stolen
13 Nov 2017 Insurance claim
21 Jan 2018
Insurance claim received under household
contents policy 11000
Taxable insurance claim 0
Tax rate Not applicable
Net tax payable amount 0
From the above table, it can be observed that for the insurance claim amount of 11000
dollars there is no tax payable amount. This is because the amount which is gained is not
considered as capital gains. Total cost of the antique bed includes both purchased amount and
expenses and is a capital asset but after the incident of stolen goods, any realised amount such as
insurance claim will not be liable for taxation under capital goods.
c. Painting
Case Scenario: In this case scenario, client has sold an expensive painting for 125000
dollars which was acquired on 2 May 1985 for 2000 from a well known Australian artist. This
3
painting was sold on 3 April, 2018 at an auction. This amount of difference will definitely be
considered as capital gain and will be taxable.
Related Tax and regulations: Painting which is acquired by the client was purchased on
2 May 2018 due to which this will not be taxable under Capital gain tax. CGT is only applicable
on those assets which are acquired after 20 September 1985. This painting will be liable for Pre
CGT. According to this pre capital gain tax, the rate of taxation is same as per the current slab
but the tax will be paid by different form. Paintings which are acquired from well known artists
are also known as capital gains. The determination of capital gain amount and net taxable
amount is mentioned below:
Date Particulars Amount
2 May 1985 Purchase a painting 2000
3 April 2018 Sale of Painting 125000
Capital gain 123000
Taxable capital gain 123000
Tax rate
20797 plus 37 cents for
each dollar over 90000
Net tax payable amount 33007
From the above calculation, it has been observed that the client is having a capital gain of
value amounting 123000. This amount of capital gain is ascertained from the difference of sold
and purchased value of the painting. This painting was acquired at 2000 and sold at 125000 and
the difference between them is capital gain. Tax rate which is applied on this painting under pre
capital gain tax is 20797 and 37% on amount which exceeds from 90000. Al last, it is ascertained
that the amount which needed to paid as tax is 33007.
d. Shares
Case Scenario: This client has a share portfolio which has variety of shares. These
securities sold and acquired over a period of time. Share portfolio includes four types of shares
which are sold in order to gain capital gain by involving cost of stamp duty and brokerage. Share
portfolio of client provides overview as 1000 shares amounting 47 dollars each, 2500 shares
amounting 25 dollar each, 1200 shares amounting .50 dollars each and 10000 shares amounting
2.50 dollars each.
4
considered as capital gain and will be taxable.
Related Tax and regulations: Painting which is acquired by the client was purchased on
2 May 2018 due to which this will not be taxable under Capital gain tax. CGT is only applicable
on those assets which are acquired after 20 September 1985. This painting will be liable for Pre
CGT. According to this pre capital gain tax, the rate of taxation is same as per the current slab
but the tax will be paid by different form. Paintings which are acquired from well known artists
are also known as capital gains. The determination of capital gain amount and net taxable
amount is mentioned below:
Date Particulars Amount
2 May 1985 Purchase a painting 2000
3 April 2018 Sale of Painting 125000
Capital gain 123000
Taxable capital gain 123000
Tax rate
20797 plus 37 cents for
each dollar over 90000
Net tax payable amount 33007
From the above calculation, it has been observed that the client is having a capital gain of
value amounting 123000. This amount of capital gain is ascertained from the difference of sold
and purchased value of the painting. This painting was acquired at 2000 and sold at 125000 and
the difference between them is capital gain. Tax rate which is applied on this painting under pre
capital gain tax is 20797 and 37% on amount which exceeds from 90000. Al last, it is ascertained
that the amount which needed to paid as tax is 33007.
d. Shares
Case Scenario: This client has a share portfolio which has variety of shares. These
securities sold and acquired over a period of time. Share portfolio includes four types of shares
which are sold in order to gain capital gain by involving cost of stamp duty and brokerage. Share
portfolio of client provides overview as 1000 shares amounting 47 dollars each, 2500 shares
amounting 25 dollar each, 1200 shares amounting .50 dollars each and 10000 shares amounting
2.50 dollars each.
4
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Related Tax and regulations: Shares and other securities which are acquired after 20
September 1985 are eligible and liable in Capital gain tax. 12000 shares in Share Build Limited
are decreased in value overtime due to which they will be considered as capital loss and will be
eligible for deduction in this year only from the capital gains for other securities. Statement
having capital gains and losses for all the securities is developed below:
Date Particulars Amount
2001 Purchase of shares 15000
4 July 2017 Sale of shares 47000
Expenses in sale 1300
Capital gain 30700
2001 Purchase of shares 30000
14 February,
2018 Sale of shares 62500
Expenses in sale 2500
Capital gain 30000
2005 Purchase of shares 6000
22 January, 2018 Sale of shares 600
Expenses in sale 600
Capital loss -6000
5 July, 2017 Purchase of shares 10000
22 January, 2018 Sale of shares 25000
Expenses in sale 2000
Capital gain 13000
Net capital gain 67700
Taxable capital gain 67700
Tax rate
3572 plus 32.5 cents for
each dollar over 37000
Net tax payable amount 13887.2
From the above statement, it has been analysed that the total capital gain which is
acquired from the various securities is 67700. This gain also includes a loss of 6000 which is
5
September 1985 are eligible and liable in Capital gain tax. 12000 shares in Share Build Limited
are decreased in value overtime due to which they will be considered as capital loss and will be
eligible for deduction in this year only from the capital gains for other securities. Statement
having capital gains and losses for all the securities is developed below:
Date Particulars Amount
2001 Purchase of shares 15000
4 July 2017 Sale of shares 47000
Expenses in sale 1300
Capital gain 30700
2001 Purchase of shares 30000
14 February,
2018 Sale of shares 62500
Expenses in sale 2500
Capital gain 30000
2005 Purchase of shares 6000
22 January, 2018 Sale of shares 600
Expenses in sale 600
Capital loss -6000
5 July, 2017 Purchase of shares 10000
22 January, 2018 Sale of shares 25000
Expenses in sale 2000
Capital gain 13000
Net capital gain 67700
Taxable capital gain 67700
Tax rate
3572 plus 32.5 cents for
each dollar over 37000
Net tax payable amount 13887.2
From the above statement, it has been analysed that the total capital gain which is
acquired from the various securities is 67700. This gain also includes a loss of 6000 which is
5
deducted capital gain. Capital gain amounting 67700 is liable for taxation which is charged at the
rate of 32.5% after 37000. Standard charge of tax which is charged is 3572. After calculating
capital gains and losses of all the securities, it has been evaluated that the net taxable amount if
13887.2 dollars.
e. Violin
Case Scenario: In this case scenario, client is a collector of musical instruments and is
owner of several violins. On 1 May, 2018 client has sold one of her violins for 12000 dollars to
her neighbour which was acquired in 1 June 1999 amount 5500 dollars.
Related Tax and regulations: Capita1536237580l gain tax under Income tax law will be
applicable in this case and according to which tax slab of income tax will be applicable on the
capital gain. Despite of the fact that the violin is used by the client on regular basis and is sold to
her neighbour there will be no effect on the taxation rate and tax amount. Calculation of net tax
payable amount and capital gain is depicted below:
Date Particulars Amount
1 June 1999 Purchase of Violin 5500
1 May 2018 Sale of Violin 12000
Capital gain 6500
Taxable capital gain 0
Tax rate Not applicable
Net tax payable amount 0
From the above calculation, it has been ascertained that there is no tax payable amount
against the capital gain of 6500. The amount of tax payable amount is zero due to the tax rates
under CGT according to which any capital gain under 18001 dollars is exempted from tax.
Above there are various determinations of capital gains which are gained by the client.
As an tax consultant of the client, total capital gain and the taxable amount against those gains is
calculated below:
Particulars Amount
Capital gain from block of land 200000
Capital gain of painting 123000
Capital gain of violin 6500
Net capital gain of shares 67700
6
rate of 32.5% after 37000. Standard charge of tax which is charged is 3572. After calculating
capital gains and losses of all the securities, it has been evaluated that the net taxable amount if
13887.2 dollars.
e. Violin
Case Scenario: In this case scenario, client is a collector of musical instruments and is
owner of several violins. On 1 May, 2018 client has sold one of her violins for 12000 dollars to
her neighbour which was acquired in 1 June 1999 amount 5500 dollars.
Related Tax and regulations: Capita1536237580l gain tax under Income tax law will be
applicable in this case and according to which tax slab of income tax will be applicable on the
capital gain. Despite of the fact that the violin is used by the client on regular basis and is sold to
her neighbour there will be no effect on the taxation rate and tax amount. Calculation of net tax
payable amount and capital gain is depicted below:
Date Particulars Amount
1 June 1999 Purchase of Violin 5500
1 May 2018 Sale of Violin 12000
Capital gain 6500
Taxable capital gain 0
Tax rate Not applicable
Net tax payable amount 0
From the above calculation, it has been ascertained that there is no tax payable amount
against the capital gain of 6500. The amount of tax payable amount is zero due to the tax rates
under CGT according to which any capital gain under 18001 dollars is exempted from tax.
Above there are various determinations of capital gains which are gained by the client.
As an tax consultant of the client, total capital gain and the taxable amount against those gains is
calculated below:
Particulars Amount
Capital gain from block of land 200000
Capital gain of painting 123000
Capital gain of violin 6500
Net capital gain of shares 67700
6
Total capital gain 397200
Less: Capital loss of previous year 8500
Net capital gain 388700
Others:
Insurance claim received under household contents policy 11000
Particulars Amount
Net tax payable amount of block of land 342
Net tax payable amount of painting 33007
Net tax payable amount of violin 0
Net tax payable amount of shares 13887.2
Net tax payable amount on insurance claim of antique bed 0
Total taxable amount for the current assessment year 47236.2
After determining tax liability of the an individual client, it has been seen that total
capital gains acquired by the client after deducting capital loss of precious year is 388700 dollars
on which tax for the 217-2018 is payable as 47236.2 dollars.
TASK 2
Case scenario: Jasmine one of employee in Rapid-Heat Pty Ltd, is provided a car whose
actual purchase price is $33000(including GST). She travelled 10,000 km through her car and
spent $550 on minor repair. In month of September company provide her with a loan of
$500000 at interest rate of 4.25%. From which she lend $50000 to her husband and rest of
amount $450000 to purchase a home. During the year she also purchased an electric heaters for
$1300 which was manufacture by Rapid-Heat.
a Advise Rapid-Heat about FBT consequences
FBT, fringe benefits tax is a type of a tax employer has to pay on certain benefit they
provide to its employees including employee family member too. A company uses fringe
benefits to attract quality staff towards their business, but pay a certain amount as a tax also. This
is separate to income tax and is calculated on the taxable value of fringe benefits provided.
Rapid-Heat provide fringe benefit to jasmine with a car, as she does a lot of travelling for work
7
Less: Capital loss of previous year 8500
Net capital gain 388700
Others:
Insurance claim received under household contents policy 11000
Particulars Amount
Net tax payable amount of block of land 342
Net tax payable amount of painting 33007
Net tax payable amount of violin 0
Net tax payable amount of shares 13887.2
Net tax payable amount on insurance claim of antique bed 0
Total taxable amount for the current assessment year 47236.2
After determining tax liability of the an individual client, it has been seen that total
capital gains acquired by the client after deducting capital loss of precious year is 388700 dollars
on which tax for the 217-2018 is payable as 47236.2 dollars.
TASK 2
Case scenario: Jasmine one of employee in Rapid-Heat Pty Ltd, is provided a car whose
actual purchase price is $33000(including GST). She travelled 10,000 km through her car and
spent $550 on minor repair. In month of September company provide her with a loan of
$500000 at interest rate of 4.25%. From which she lend $50000 to her husband and rest of
amount $450000 to purchase a home. During the year she also purchased an electric heaters for
$1300 which was manufacture by Rapid-Heat.
a Advise Rapid-Heat about FBT consequences
FBT, fringe benefits tax is a type of a tax employer has to pay on certain benefit they
provide to its employees including employee family member too. A company uses fringe
benefits to attract quality staff towards their business, but pay a certain amount as a tax also. This
is separate to income tax and is calculated on the taxable value of fringe benefits provided.
Rapid-Heat provide fringe benefit to jasmine with a car, as she does a lot of travelling for work
7
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purpose and sale activity. Company has to pay a tax on car fringe benefits and on purchase of
electric heater.
purchase price of car $33000
amount spent on repair $550
car was travelled about 10000 km so tax rate 26.00%
actual sell price of heater $2600
jasmine purchase price $1300
taxable amount $1300
FBT rate for year 2018-19 47.00%
taxable value $611
taxable value of heater($33000*26%)- $550 $8030
Taxation on loan (500000*6.22%) 31100
Net taxable value 39741
Rapid-Heat Pty Ltd. purchase a car for $33000 and jasmine spent $550 on maintenance.
She travelled distance of about 10000 km so tax would be lye at 26%. By using statuary formula
to calculate car fringe benefits actual taxable value would be $8030. Fringe benefit tax on
purchase of electric heater is $611 as tax rate for year is 47%.
b. Variation to answer if the Jasmine used 500000 as share investment
Jasmine has received a loan amount of 500000 dollars at an interest of 4.5%. Jasmine
used 450000 of loan for holiday home and the balance of 50000 was used for share investment.
As a tax consultant, the liability over Rapid Heat Pty Ltd under Fringe Benefit Tax is calculated
below:
Particulars Amount
Loan Amount to Jasmine 500000
Purchase of holiday home 450000
Share investment 50000
Tax rate 6.22%
Taxable amount to Rapid Heat(450000*6.22%) 27990
8
electric heater.
purchase price of car $33000
amount spent on repair $550
car was travelled about 10000 km so tax rate 26.00%
actual sell price of heater $2600
jasmine purchase price $1300
taxable amount $1300
FBT rate for year 2018-19 47.00%
taxable value $611
taxable value of heater($33000*26%)- $550 $8030
Taxation on loan (500000*6.22%) 31100
Net taxable value 39741
Rapid-Heat Pty Ltd. purchase a car for $33000 and jasmine spent $550 on maintenance.
She travelled distance of about 10000 km so tax would be lye at 26%. By using statuary formula
to calculate car fringe benefits actual taxable value would be $8030. Fringe benefit tax on
purchase of electric heater is $611 as tax rate for year is 47%.
b. Variation to answer if the Jasmine used 500000 as share investment
Jasmine has received a loan amount of 500000 dollars at an interest of 4.5%. Jasmine
used 450000 of loan for holiday home and the balance of 50000 was used for share investment.
As a tax consultant, the liability over Rapid Heat Pty Ltd under Fringe Benefit Tax is calculated
below:
Particulars Amount
Loan Amount to Jasmine 500000
Purchase of holiday home 450000
Share investment 50000
Tax rate 6.22%
Taxable amount to Rapid Heat(450000*6.22%) 27990
8
From the above calculation, it has been seen that due to purchase of shares the net taxable
amount on loan is reduced because the amount used to purchase shares are considered as
investments which are not taxable. Hence, the net taxable amount on loan is 27990.
CONCLUSION
From the above project report, it has been observed that taxation law and is practices are
plays a significant role in investments. From analysing the first case scenario, it has been
analysed that the client is an antique collector and does not runs any business and by selling her
capital assets, she has received a huge amount of capital gains which are taxable under taxation
law. By analysing second case scenario, it has been analysed that Rapid Heat company has faced
various consequences of FBT.
9
amount on loan is reduced because the amount used to purchase shares are considered as
investments which are not taxable. Hence, the net taxable amount on loan is 27990.
CONCLUSION
From the above project report, it has been observed that taxation law and is practices are
plays a significant role in investments. From analysing the first case scenario, it has been
analysed that the client is an antique collector and does not runs any business and by selling her
capital assets, she has received a huge amount of capital gains which are taxable under taxation
law. By analysing second case scenario, it has been analysed that Rapid Heat company has faced
various consequences of FBT.
9
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