Comprehensive Analysis: Capital Gains and Fringe Benefits Tax

This report provides a comprehensive analysis of the Australian taxation system, focusing on capital gains tax (CGT) and fringe benefits tax (FBT). It includes calculations for net capital gains or losses on various assets such as land, antiques, paintings, and shares, considering relevant legislation and available discounts. The report also examines the FBT consequences for an organization providing a car and loan to an employee, calculating the FBT liability and exploring alternative scenarios. The analysis incorporates statutory formulas and relevant tax laws to determine the taxable amounts and ensure accurate tax reporting. Desklib offers a platform to access similar solved assignments and study resources for students.

Taxation 1
Running Head: Taxation
Taxation

Taxation 2
Executive Summary:
The taxation system in Australia has been subject to various rules and regulations while
concentrating on the various emerging reforms affecting thesystem. In order to assess the
correct taxable incomeof assesse use of theprovisions contained in Income Tax Assessment
Act 1997 and 1936 has been taken while identifying the mandatory requirements to be
fulfilled. The taxation problems will be associated with identifying the assessability of
various items concerned with the transactions entered into by the assesse during a particular
year. The technical announcements and various legislations that have been issued should be
taken into consideration while calculating the taxation liability of the assesse. The various
types of incomes forming part of the total income of assesse will be aggregated and has to be
analysed for the purpose of calculating correct amount of income as per the applicable
legislations.

Taxation 3
Table of Contents
Executive Summary:..................................................................................................................2
Introduction:...............................................................................................................................4
Question 1..................................................................................................................................5
Calculation of net capital gain or loss of the client for the current tax year ending on 30
June.........................................................................................................................................5
Question 2................................................................................................................................11
(a) FBT consequences and calculation of FBT Liability for the year ending 31 March 2018
..............................................................................................................................................11
(b) If Jasmine used $50,000 to purchase shares herself rather than lending to husband......15
Conclusion:..............................................................................................................................17
References:...............................................................................................................................18
Appendices:..............................................................................................................................19

Taxation 4
Introduction:
The task is carried out in the context of taxation theory, law and practice. This task manages
the ideas of capital gain and fringe benefits tax that identifies with the pay of taxpayers in
diverse scenarios in Australia. The capital gain tax has been figured for a customer who is an
individual taxpayer. The capital gain for various sorts of benefits, for example, land, shares,
antique bed, paintings, violin and so forth are incorporated into this task. These estimations
are made under various situations keeping in mind the end goal to apply an assortment of
ideas and matters of capital gain. The fringe benefits tax counts identify with the
organizationfewer than two unique situations. The task will be providing an overall learning
on the taxation theories.

Taxation 5
Question 1
Calculation of net capital gain or loss of the client for the current tax year ending on 30
June
At the time when a taxpayer sells a capital asset that is produced by him capital gain or loss
arises. Capital gain or loss is the measure of distinction between the sum paid on the securing
of the advantage and the sum got on the transfer of the benefit. A person is required to
incorporate the capital gain or loss in his Income Tax return and make good on the tax
obligation appropriate on such sum. The capital gain charge is a piece of Income tax. At the
point when a person brings about capital gain, it is included the aggregate pay and, in this
way, expands the taxation rate of the person. On the off chance that person acquires capital
loss, it can't be set off against another salary yet can be utilized to lessen the measure of
capital gain whether in present or future years (Harding, 2013). Every one of the advantages
procured after 20 September 1985 is qualified for CGT barring individual resources and
depreciable resources held for tax purposes. If there should arise an occurrence of individual
person capital gain rebate of the half on capital gain is accessible sue to which the capital
gain charge risk of the individual is decreased to half. This markdown is 33.33% for SMSF
and there is no such rebate for organizations. Anyway, indexation technique is likewise
accessible for resources obtained before 21 September 1999. The person can receive any
strategy which gives him the best expense results. Likewise, the rebate strategy and
indexation technique can't be connected to resources held for under a year prior to the deal
(Australian taxation office, 2018).
a.Block of vacant land
For this situation, the block of empty land was sold for $320,000 on 3 June of current year
which was gained on 1 January 2001 for $100,000. The acquirer likewise caused extra costs

Taxation 6
adding up to $20,000. The store was payable to the person on 3 January of one year from
now, however, the agreement was marked on 3 January of the current year (Buchan, Olesen,
and Carberry, 2013).
Capital gain tax is accounted for in the year in which the person goes into the agreement of
offer independent of whether the sum is gotten later. In this manner, the capital gain on a
block of empty land will be accounted for in the present year. The benefit was procured after
30 September 1999; consequently, indexation technique for ascertaining capital gain can't be
connected to the land. The customer is an individual; in this way, half rebate rate can be
connected to her capital gain. The capital gain on the offer of a block of empty land can be
figured as takes after:
Working notes:
1. The measure of repairs of $20,000 is added to the expense of procurement since the costs
were brought about for the securing of land and are perpetual in nature.
b. Antique bed
For this situation, the person bought an antique bed on 21 July 1986 and acquired expense of
changes adding up to $1500 on 29 October 1986. Amid the present duty year, the bed was
stolen and was esteemed for protection reason for a measure of $25,000.
Anyway,theinsurance agency paid the customer a measure of $11000 for the stolen bed under
her approach conditions (Burkhauser,Hahn, and Wilkins, 2015).

Taxation 7
The bed was procured by the customer before 30 September 1999, in this manner indexation
technique is pertinent. Additionally, the customer is an individual; along these lines,therebate
strategy is likewise relevant. We will choose the strategy which results in impose reserve
funds for the customer. The capital gain can be figured as takes after:

Taxation 8
Indexation method
Working note:
1. The indexed cost of purchase of bed would be $3500*68.7/43.2 = $5565.97
2. The indexed cost of alteration of bed would be $1500*68.7/44.4 = $2320.95
Discount method
The net capital gain is less under discount method, in this manner discount technique would
be utilized for announcing the capital gain on an antique bed. In this case, discount method
will be applied and therefore capital gain will be $3000 and the capital gain recognized in the
indexation method will not be considered as the same is excessive from the assesse.
(c) Painting

Taxation 9
In the provided case, customer obtained painting from a craftsman on 2 May 1985 for $2,000
and sold it in workmanship sell-off amid the present expense year for $125,000. Since the
canvas was obtained by the customer before 20 September 1985, the capital gain tax won't be
qualified on such painting. Capital gain tax in Australia began on 20 September 1985 and in
this manner, resources obtained before this date doesn’t go under the ambit of capital gain
impose 9in Australia (Burkhauser, et. al., 2015).
(d) Shares
For this situation,thecustomer has an arrangement of four distinct classes of offers. Every one
of these offers was obtained after 30 September 1999 and accordingly indexation technique
won't be material on the estimation of capital gain marked down of these offers. The capital
gain at a bargain of offers can be figured as takes after:
Working notes:
1. The capital gain loss of $6000 on offers of Young Kids Learning Ltd can be set off
against the capital gain of the present year.

Taxation 10
2. The half discount on shares of shareBuild Ltd isn't accessible since these shares were
held for a time of under a year prior to the deal.
(e) Violin
For this situation,acustomer sold a violin from her melodic accumulations for $12,000 to his
neighbour on 1 May of the present expense year (Lignier and Evans, 2012). This violin was
gained by her on 1 June 1999. Since the violin was procured for an estimation of $500 or
more, in this way it won't be excluded from capital gain impose. Likewise, shower indexation
and rebate strategies are accessible. The capital gain can be computed as takes after:
Working note:
1. The indexed cost of purchase of violin will be $5500*68.7/68.1
Discount method
The capital gain is less under discount method, in this manner the discount method would be
used for reporting the capital gain of the violin. The relevant laws in this aspect confirm the

Taxation 11
case where the discounting method will be adopted where the capital gain is recognized as
less while applying the discount method.

Taxation 12
Calculation of total capital gain
Question 2
(a) FBT consequences and calculation of FBT Liability for the year ending 31 March
2018
Fringe benefits tax is a type of taxthat is forced by the Australian taxation office on the
citizens inside the Australian tax system. This assessment is forced with respect to non-
monetary benefits given by the business to their workers out of the business understanding or
authoritative course of action. These incorporate the advantages given to the family or
partners of the workers also. These advantages are other than the measure of pay paid in real
money frame, anyway, they can either shape Some portion of compensation or compensation
or be notwithstanding the yearly pay or wages paid. The tax ascertained on the aggregate sum
of assessable Fringe benefits tax is known as FBT. The fringe benefit taxationwill be a
statutory tax calculated for the assesse during the relevant year. The same will include all
types of residual benefits, expenses benefits and other benefits which are extended to the