TAXA5002/5014 Reflective Journal: Taxation of Capital Gains Review

This reflective journal delves into the topic of capital gains taxation (CGT), exploring its introduction, basic taxation concepts related to business transactions and property development. It examines the fairness of CGT in relation to wealth distribution, vertical ability, and horizontal equity. The journal discusses tax policy reforms, including lowering CGT discounts and interest deduction access for negatively geared investments. It highlights the simplicity of CGT implementation and its effects on different entities like companies and trusts. The journal further explains the relationship between income and capital gains, noting the timing of transactions and the application of discounts under specific rules, while also referencing section 11820, which prioritizes income tax assessment. Desklib provides a platform for students to access this and many other solved assignments and study resources.

Running head: TAXATION
Taxation
Name of the Student
Name of the University
Authors Note
Course ID

1TAXATION Bibliography:Bibliography:
Topic 1: Reflective Journal on Taxation of Capital Gains
The topic of taxation of capital gains provides a thorough understanding regarding the
introduction of CGT. The introduction of CGT is mainly for reviewing the basic taxation
concepts for transactions that are related to business or involves performing the property
development business. It is understood that capital gains are more likely to be implemented
on the high wealth people. Commenting upon the fairness of CGT it mainly deals with
vertical ability or horizontal equity of an individual’s ability to pay the tax. The topic also
provides understanding on reformation of tax policy by including the measures of lowering
the extent of CGT discount and access to deduction of interest for the negatively geared
investment.
I have also understood that CGT simple to understand and implement. It helps in
reducing the compliance costs however it suffers from the shortcoming that adjustment for
the individual circumstances would result in more complexity. Furthermore, CGT has
different effect on the entities. For companies, the CGT is included under income but no
discount is provided while for trust CGT is included into the income but flows through the
beneficiary for the computation of NCG. I have also gained understanding of relationship
between income and capital gains. The CGT that are computed under the specific rules is
associated to the timing of the transaction and the application of discount while section 118-
20 explains that provision of income tax takes precedence and would still be assessed as
income when the normal rules are applied.

2TAXATION Bibliography:Bibliography:
Bibliography:
Morgan, A., Mortimer, C. and Pinto, D., 2018. A practical introduction to Australian taxation
law 2018.
Sadiq, K., 2018. Australian Tax Law Cases 2018. Thomson Reuters.