Fringe Benefit Expenses
Added on 2019-09-23
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[TYPE THE COMPANY NAME]Taxation Assignment[Type the document subtitle]Student[Pick the date][Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.]
ContentsCapital gains tax case study.........................................................................................................................2Fringe Benefits Tax Case study....................................................................................................................7References.................................................................................................................................................121
Capital gains tax case studyCase facts:The resident Assessee is Fred. In the S.2 (7) of the Income Tax, Assessee is that person to whomany sum of money or any tax is payable under the Income tax Act. So, in this case, the money orany tax is payable to Fred. The Holiday home has been sold by Fred and he has his ownresidence as the main residence where he lives. The location of the holiday home is in BlueMountain. In 2015, in the month of August, the agreement to sell the Holiday home happened.But, the consideration of the sale was received in February 2016 which was $8, 00,000. The costwhich was borne for selling the home was almost $1100 and $9900. This included the legalcharges and the GST and also the commission of the sale agent. The year in which the propertywas purchased was in March 1987 and it was bought for $100000. Along with this amount, thebuyer also paid a stamp duty of $2000 and $2000 as the legal fees. Apart from this, there was acapital loss of $1000 to Fred because of the sale of the shares. Assumptions made for solving the case:The place where the Assessee lives is his Main Residence and it is different from the HolidayHome. The property to be sold comes within the Taxation Authorities. The year for assessmentwill be considered from 1st July to 30th June. The seller has not attempted to save the tax bymaking any investment apart from the consideration of sale. Solution:Regarding the Taxation of August 2015: The Income Tax Assessment Act of 1937 says thatwhen the real estate property is sold, the agreement of the contract is valid when it gets registered2
with the local authorities but this is not in the case of the property which is sold or purchased forthe personal use. The Assessee, who is Fred in this case, needs to see the taxation point in theevent of the capital Gain. As per the facts of the case, the contract of the sale got registered inthe month of August 2015; therefore, the liability of the capital gain tax will begin from the year2016-17. But, when the settlement will happen, then only the liability for the tax will be paid.Since, in February 2016, the settlement is done, so, the tax of the capital gain will be paid in theyear 16-17. For computing the tax for the house property, the discount method and the indexation methodwill be used:Discount methodSale consideration800000Less Cost incurred forSelling Legal Expense (1100)Agent’s commission(9900)Net sales considerationA789000Cost Base Cost of Acquisition100000Stamp Duty 2000Legal Fees1000Total cost baseB103000Capital Gain IncomeA-B686000Less 50% Discount 343000Discounted Capital Gainincome 343000Indexation Method Sale consideration800000Less Cost incurred forSelling Legal Expense (1100)Agent’s commission(9900)Net sales considerationA7890003
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