Taxation Law Assignment: CGT, Depreciation, and Business

This Taxation Law assignment analyzes two key issues: Capital Gains Tax (CGT) implications for Jasmine's transactions, including the sale of a car, a cleaning business, and various assets like furniture and paintings; and the inclusion of the cost of a CNC machine in John's Capital Allowance computation. The assignment delves into relevant sections of the Income Tax Assessment Act (ITAA), such as sections related to CGT, depreciating assets, and cost base calculations. It applies these rules to specific scenarios, determining potential tax consequences and calculating the impact on capital gains or losses. The solution provides a detailed breakdown of each transaction, considering factors like asset type, ownership period, and relevant exemptions, to arrive at conclusions regarding tax liabilities and allowances.

Running head: TAXATION LAW
TAXATION LAW
Name of the Student
Name of the University
Author Note

1TAXATION LAW
A1
Issue
Whether Jasmine would be facing consequences for the transactions under Capital Gain
Tax.
Rule
If there is some kind of rights that are regarded as equitable and some rights that are legal
for an asset that can also be represented as a property then it is known to be Capital Gain Tax
under that of the sec 108-5 of the ITAA. In order to be a portion of the CGT the property needs
to be calculated as the CGT where the property would be on the date which would be after that
date of 20.09.1985 where such would be considered to be known as or recognized as post CGT.
Similarly, if any asset or the property which has been made before such a date then those are
recognized as the pre CGT.
An A1 category which is prevalent in the ITAA under the sect 104-10 which would be
said to have been beseeched only if the person who owns or possesses an asset or property has
already gotten rid of such property in the method of selling such a property only then would it be
considered that a CGT to be implored. There needs to be a change which is actual in the
proprietorship of such property not just by modifying in the nature of that ownership (Evans,
Minas and Lim 2015).
The requirements that have been incorporated under the Act in the section 110.25 would
be known in order to have any kind of impact on the computations of the CB of that of the CGT
when it was regarded to be calculated with the CGT liability. There are five category or elements
which are:

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First Element is the CB that is considered to be given under this element. The expenses
are considered to be included as a part of the CB or the attainment of an asset while being
acquired as an outgoing. If there has been an expense regarding the exchange of property and not
through economic or monetary value then the expense which has been through the exchange of
such property is considered to be taken into consideration or be calculated which would assist in
acquiring the worth of any kind of properties (Mangioni 2015).
Second Element is the category where the expenses that have been acquired which are in
connection to any kind of happening that has been an accomplishment of property or asset.
Third Element is when there has been an expense which is relating to possession or any
kind of ownership of a property which would in turn contain the CB. In such a condition the
asset or the property would only be consisting if it has been acquired and has been stimulated
subsequent to the date of 20.08.1991 after the computation of the CB. The taxpayer have made
any kind of alterations concerning the loan proving and if there has been any payments which
have been made for those changes would be understood as maintenance costs which be involved
in the element. The payments are considered to be acting as collectibles from that CB and such a
thing would not be included as this element.
Fourth Element includes the expenses which are considered to be acquired that would
help in causing an improvement which would be for the purpose to increase the CB value of the
asset.
Fifth Element would be obtaining the expenses that would be acquired for trying to lay
the footing for any conflicts or disputes that arises in any kind of court proceedings that is the
reason for any ownership regarding that particular property.

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The calculation that involves the computation of the cost proceeds of that of the CGT
property or asset that can also be computed as the CGT liability is the amount which are
contained in every kind of financial or monetary inflow which impacts the taxpayer as it tried get
rid of such asset. If such an inflow have been made through an exchange of the property where it
would not be done through the economic value of that earning then such would be considered to
be done through an exchange and not through the economic value as it has been mentioned under
the section of 116.20 of the ITAA.
The discount, which has been considered to be obtained by the Capital Gain, is fifty
percent. It is considered to be applicable only if the owner or the taxpayer has used and owned it
for a term more than a year. It has been mentioned under the section 115 of the ITAA.
If the asset or the property which is owned by the tax payer is considered to be a
permanent residence of that tax payer then under sec 118.20 of the ITAA would be exempted
from being considered to be applicable for CGT.
Application
As it has been mentioned in the rule above any property or house if it has been bought or
acquired on that date which is 20.09.1985 if such property has been sold falls under the category
of post CGT property. Since it has been discussed in the rule above that the asset which is
considered to be a home would be considered as an exception or be exempted from the CGT as it
is the permanent or standard residence although it has been pointing in the direction that it falls
under A1 category CGT even then would it be exempted from such.
For that of the sale of a car that costs around 31000 dollars where the value in the current
scenario would be 10000 dollars, selling of such would be considered to have been invoking the

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A1 category of the CGT. Such would be computed as a deduction of the CB from the CP which
is also known as Cost Proceeds. The computation process in this case has been considered to be a
loss of that of the CB which would be in turn be interchanged by that of the reduced CB which in
turn would try to eliminate the depreciating cost which can be done from that of the third
element. The sale of the car would be increasing the capital loss by 21000 dollars as it can be
understood as that of the loss that means that it was used as a personal use which was made by
the taxpayer which is disregarded from the computation of tax of that year.
The cleaning business which has been constituted by Jasmine and being sold the
purchaser who has been through a process been selected by the owner Jasmine is amounting to
that of 125000 dollars. The selling of the business is also considered to consist of the payments
which have been made for that of the equipment amounting to that of 65000 dollars but the
actual worth of such is considered to be 75000$ that consists of the amount for the goodwill
which is 60000 dollars. Jasmine has the ability to obtain some kind of concession which would
be that of small entity concession for the virtue of that of the sale of that business. Such sale
which also contains the equipment which are for the business is known as the e capital gain
which would fall under the category A1 and would be known as e capital gain which contains the
food which is c2 that would be containing any kind of legal fee which has been mentioned in the
creation of the contract. In this particular instance the Cost Base would be considered to be the
cost of the ownership along with the price of that sum. The asset’s networth would be below that
of the six million dollars. The asset was considered to be used and had been held for that of more
than 12 months time and the fifty percent of that CT would be of the taxpayer.
The furniture in this particular scenario would be gotten rid off where the price of such
was 5000 dollars. The offers all were under 2000 dollars and not increasing that amount. The

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CGT asset which would be under the 10000 dollars and if it is for any personal use then it would
be overlooked.
In this case the paintings which were sold by Jasmine needed to be for the value of 35000
dollars but in this case there were no paintings which were costing more than that of 500 dollars
and just one painting which was in the price of 1000 dollars was from an artist and it was sold
after being purchased for the value of 5000 dollars. The paintings in this are considered to be that
of collectibles and in this value would be less than that of 500 dollars and it can be overlooked
for that of CGT. The 5000 dollars painting which would be computed as a capital gain as it had
been sold and it would be accruing four thousand dollars and thus a discount would be available
as the capital gain would decrease the price that would be to 2000 dollars.
Conclusion
There can be actions taken against Jasmine which would be considered for any
transactions that are relating to CGT.

6TAXATION LAW
A2
Issue
Whether there needs to be any inclusion of cost of CNC machine for the Capital
Allowance Computation in this case.
Rule
The depreciating assets are to have a functioning period of life which would be posing as
restriction or any kind of limitation with that of its functioning period of time. Such is mentioned
in the section 40.30 of the Act.
The value of the depreciating asset and that of the weakening of such assets is considered
to be due to the taxation year which is specific and would be considered to be computed as that
to the statutory provision under div 40 of that of the ITAA and it is known as a depreciating
asset.
The starting of the value which is decreased would in connection considered to be the
value of the depreciating asset and such would be understood as the starting period. The constant
percentage is the value that decreased are to be calculated and such is understood as cost of the
asset under the method of prime cost.
The Calculation
The Decline of the value of the asset = asset cost * ( 365 days or the days held ) * ( the
effective life / 100%).

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The decrease in the value of any asset after it has begun from the starting period of such
asset demonstrates the time of the usage of such asset that has been used under the sec 40.60 of
that of the ITAA.
The computation regarding the cost of the asset that is considered to be depreciating has
been mentioned in the subdivision of 40-C of ITAA.
There needs to be a calculation of two elements which would be considered to be
calculating the CB of the depreciating asset under the sec 40-175 Of the ITAA.
The acquiring of an asset by the owner is to be calculated or computed under sec 40-185
of the above-mentioned Act. The calculation would be at the point of time when the owner or
holder of that asset would hold such an asset. Such would mean that the holder has gone through
the financial benefit that has been considered to have been aroused which would be through the
acquiring of such asset in the existing state and such existing location that was considered in
order to hold such an asset.
Application
The particular scenario talks about the import which happened by John for a CNC
machine from Germany where such a purchase was dated on 1.11.2014. The purchase of it cost
around 300000 dollars and would be considered to be under the element one. John had gone to
inspect the factory before purchasing where such a trip amounted to cost around 12000 dollars.
Such a trip had been taken before the buying of the asset thus would not be considered to be a
part of cost which is connection to that asset. The calculation which would be done for the asset
would be only after the purchaser has purchased such an asset. It would contain the expenses
which were considered to be held by the holder which would be in connection to the financial

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interest that has been considered to be made due to such obtainment of such an asset in the
existing state or location in which the asset has been held. The second element under this would
be considered to be through the expenses which are in relation to that of 25000 dollars in order to
install the machines. The machine after being used by the purchaser who was John had found
that a guiding rod could be used by the machine which would in turn intensify the efficiency in
the machine where 5000 dollars which were added and installed on the date of 1st Feb would be
considered to be acting as a cost of the machine and the machine started working effectively
from that date onwards which makes the starting period to be the 1st of Feb.
Conclusion
The cost that was involving the CNC machine would amount to 330000 dollars.

9TAXATION LAW
References
Evans, C., Minas, J. and Lim, Y., 2015. Taxing personal capital gains in Australia: An alternative
way forward. Austl. Tax F., 30, p.735.
Income Tax Assessment Act 1997 (Cth).
Mangioni, V., 2015. Land Tax in Australia: Fiscal reform of sub-national government.
Routledge.