Australian Taxation Law Assignment - [University Name]

This Australian Taxation Law assignment addresses two key questions related to taxation. Question 1 focuses on determining assessable income, analyzing various income sources like tips, restaurant income, and gifts, applying relevant ATO guidelines and legal precedents. Question 2 delves into capital gains tax (CGT) implications for the sale of different assets, including a house, car, small business, furniture, and paintings. The analysis considers specific provisions of the ITAA 1997, such as Subdiv 118-100, s118-5, s995-1, subdiv 152-A, s108-20, and s118-10(3), to determine tax liabilities, including the application of retirement concessions and the treatment of personal use assets and collectables. The assignment concludes with a bibliography citing relevant sources from ATO and other governmental websites.

Running head: AUSTRALIAN TAXATION LAW
Australian Taxation Law
Name of the Student
Name of the University
Author Note

1AUSTRALIAN TAXATION LAW
Table of Contents
Question 1....................................................................................................................................2
Question 2....................................................................................................................................2
Bibliography.................................................................................................................................4

2AUSTRALIAN TAXATION LAW
Question 1
Nature of Item Amount Notes
Tips from Customers $
335.00
Part of services provided under Calvert v
Wainwright
Income from Crown Melbourne
Restaurants
$
25,000.0
0
ATO guidelines
Expensive perfume received as a
gift
- Special occasion. Unlikely to be recurring
Monthly entertainment $
380.00
Incidence of employment and is a regular
payment
Christmas gift - Not included as personal relation exists as in
Scott v FCT
Annual Assessable income $
25,715.0
0
Question 2
Sale of House property: Income earned from the sale of the main residence of an individual is
not chargeable under CGT according to Subdiv 118-100 of Pt 3-1 of ITAA 1997. Any capital
gains or losses arising from the sale of the main residence of an individual are to be disregarded
in the hands of a taxpayer. Hence, Liu does not need to pay any tax on this sale.

3AUSTRALIAN TAXATION LAW
Sale of Car: Capital gains or losses arising from the sale of certain assets like cars, motorcycles,
or vehicles of similar nature and a decoration are to be disregarded under s118-5 ITAA 1997.
The definition of a car should meet the criteria stated under s995-1 ITAA 1997. A car should not
be able to carry a load of more than 1 tonne or more than 9 passengers at once. Hence, tax is not
levied on the sale of the car made by Liu.
Sale of Small business: As Liu is aged above 55 years and is selling off all her assets and
retiring, she should avail the retirement concession available under subdiv 152-A of ITAA 1997.
Under this scheme, a lifetime capital gains of $500000 are exempt from tax. Hence, Liu does
need to pay taxes on the same as her total capital gains are $62000, which is within the
acceptable limit of $500000.
Sale of Furniture: Furniture is included in the personal use assets stated under s108-20 ITAA
1997. However, CGT would be charged on the personal use assets only if their cost of purchase
is more than $10000 under s118-10(3). If the cost is below $10000, then the capital gains or
losses arising from the same are required to be disregarded. For Liu, as the furniture was
purchased for $2000, no CGT should be charged on the same. All capital gains or losses arising
from this sale need to be disregarded.
Sale of paintings: Collectables as defined by s108-10 ITAA 1997 are not chargeable under CGT
if they are acquired for lower than $500 under s119-10(1). The capital gains and losses are
required to be disregarded from these sales. Liu needs to pay CGT on the painting which she had
acquired for $1000. The total capital gains arising from this sale are $7000 and tax needs to be
paid on the same.

4AUSTRALIAN TAXATION LAW
Bibliography
Ato.gov.au. (2020). Capital gains tax. [Online] Available at:
https://www.ato.gov.au/General/Capital-gains-tax/ [Accessed 30 Jan. 2020].
Aiatsis.gov.au. (2020). [Online] Available at:
https://aiatsis.gov.au/sites/default/files/docs/research-and-guides/native-title-research/
NativetitleTaxation.pdf [Accessed 30 Jan. 2020].
Business.gov.au. (2020). Capital gains tax for business | business.gov.au. [Online] Available at:
https://www.business.gov.au/Finance/Taxation/Capital-gains-tax-for-business [Accessed 30 Jan.
2020].
Info.gov.hk. (2020). [Online] Available at: https://www.info.gov.hk/bor//en/docs/d2891.pdf
[Accessed 30 Jan. 2020].