Taxation Theory, Practice & Law Report: Capital Gains and FBT Analysis
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This report delves into taxation theory, practice, and law, providing a comprehensive analysis of capital gains, fringe benefits tax (FBT), and loan benefits. The report begins by determining the net capital gain of a client as of June 30, 2018, detailing calculations for various assets including vacant land, an antique bed, a painting, shares, and a violin. The report then advises on analyzing FBT on various assets, explaining the concept and calculation steps, including pros and cons. Finally, it analyzes the tax consequences when a loan amount is used to purchase securities, offering a complete overview of taxation concepts and their practical application. The analysis includes detailed calculations and interpretations for each scenario, offering insights into tax liabilities and financial planning.

TAXATION THEORY,
PRACTICE & LAW
PRACTICE & LAW
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
Determining the net capital gain of client as on 30 June 2018 ..............................................1
QUESTION 2...................................................................................................................................2
(a) Advising Jasmine in analysing FBT on various assets.....................................................2
(b) Analysing the tax consequences as per loan amount will be used by Jasmine in purchasing
securities.................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
Determining the net capital gain of client as on 30 June 2018 ..............................................1
QUESTION 2...................................................................................................................................2
(a) Advising Jasmine in analysing FBT on various assets.....................................................2
(b) Analysing the tax consequences as per loan amount will be used by Jasmine in purchasing
securities.................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The report is about the taxation theory and practice law. Theory of taxation includes lots
of taxes which are payable and not to be payable by clients in the organisation. Taxation theory
and practise law, the tax are automatically identified because the tax payers have to pay some
proportion to the government benefits they receive. This assignment will present the clients net
capital gain or loss according to the information given. the report will provide the deep insight of
meaning of fringe benefits tax with the steps of calculation. Present assignment will calculate the
fringe benefit liability in tax credit relation. Later, the report will also identify the non-fringe
benefit amount according to the given information.
QUESTION 1
Determining the net capital gain of client as on 30 June 2018
The rise in the value of a capital assets that provides the higher worth than the price of
purchase is known as capital assets. Until the assets are sold gain is not realized. There are two
types of capital gain that are short term which are less than one year and others are long term
which are considered to be more than one year (Paolella and Durand, 2016).
It is a profit or earnings that comes from the sale of the capital assets is known as capital
gain. This profit is counted as an income of the payee and therefore, charged to tax for the year at
which transfer of the capital tax place. If there is no sale of asset, only the transfer of property
takes place, here the capital gain does not apply (Weber, 2014). However, if this capital asset is
sell by the individual who owned it, the capital gain will be applicable. The Income Tax Act has
generally exempted possession acceptable as gifts by way of an acquisition or will.
Below the various information with calculation and interpretation has been discussed.
Block of Vacant Land
In this scenario, the client has done legal agreement to sell block of vacant land for
$320000. in 2001, she has purchased this land for $100,000 and makes $20000 other expenses
like local council, water sewerage rates and land taxes. The below listed the calculation of her
capital gains.
1
The report is about the taxation theory and practice law. Theory of taxation includes lots
of taxes which are payable and not to be payable by clients in the organisation. Taxation theory
and practise law, the tax are automatically identified because the tax payers have to pay some
proportion to the government benefits they receive. This assignment will present the clients net
capital gain or loss according to the information given. the report will provide the deep insight of
meaning of fringe benefits tax with the steps of calculation. Present assignment will calculate the
fringe benefit liability in tax credit relation. Later, the report will also identify the non-fringe
benefit amount according to the given information.
QUESTION 1
Determining the net capital gain of client as on 30 June 2018
The rise in the value of a capital assets that provides the higher worth than the price of
purchase is known as capital assets. Until the assets are sold gain is not realized. There are two
types of capital gain that are short term which are less than one year and others are long term
which are considered to be more than one year (Paolella and Durand, 2016).
It is a profit or earnings that comes from the sale of the capital assets is known as capital
gain. This profit is counted as an income of the payee and therefore, charged to tax for the year at
which transfer of the capital tax place. If there is no sale of asset, only the transfer of property
takes place, here the capital gain does not apply (Weber, 2014). However, if this capital asset is
sell by the individual who owned it, the capital gain will be applicable. The Income Tax Act has
generally exempted possession acceptable as gifts by way of an acquisition or will.
Below the various information with calculation and interpretation has been discussed.
Block of Vacant Land
In this scenario, the client has done legal agreement to sell block of vacant land for
$320000. in 2001, she has purchased this land for $100,000 and makes $20000 other expenses
like local council, water sewerage rates and land taxes. The below listed the calculation of her
capital gains.
1
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Interpretation:
In above, the calculation of capital gain has been done to the year for the sale of land. In
this firstly, the calculation of cost based index has been done. Purchase price of land which is
$100000 were added with the sewage rates land taxes that was 20000. that total cost base
indexed was $120000. Secondly, the proceedings from selling house was $320000 from that the
cost base indexes have been deducted by $120000 (Wolfman, Schenk and Ring, 2015). The
gross capital gain was $200000. According to the Capital gain section 54B,' The property
purchase after 11.45 am on 21st September 19999 the discount model applies in which the
exemption is given only on half amount of capital which is $100000.
Antique bed
The client has purchased the bed for $3500 on 21st July which have been stolen from her
house costing the market value in the present year $25000. she has made an insurance on bed at
2
In above, the calculation of capital gain has been done to the year for the sale of land. In
this firstly, the calculation of cost based index has been done. Purchase price of land which is
$100000 were added with the sewage rates land taxes that was 20000. that total cost base
indexed was $120000. Secondly, the proceedings from selling house was $320000 from that the
cost base indexes have been deducted by $120000 (Wolfman, Schenk and Ring, 2015). The
gross capital gain was $200000. According to the Capital gain section 54B,' The property
purchase after 11.45 am on 21st September 19999 the discount model applies in which the
exemption is given only on half amount of capital which is $100000.
Antique bed
The client has purchased the bed for $3500 on 21st July which have been stolen from her
house costing the market value in the present year $25000. she has made an insurance on bed at
2
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time she purchased it. After the bed has stolen she claimed for the insurance and get $11000 for
that. Below the capital gain calculation is being done.
Interpretation
The calculation of capital gain has been done for the year to the sale of Antique bed. In
this firstly, the calculation of cost based index has been done. Purchase price of land which is
$3500 were added with the additional incurred expenses $1500. to find out the total cost base
indexed was $500 (Tang and Wan, 2015). Secondly the insurance claim which she has received
was $ 11000. The gross capital gain was $11000. According to the Capital gain section 45 (1A),'
The property purchase after 11.45 am on 21st September 1999 the indexation model applies in
which the exemption is given only in half amount of capital which is $ 11000.
Painting
3
that. Below the capital gain calculation is being done.
Interpretation
The calculation of capital gain has been done for the year to the sale of Antique bed. In
this firstly, the calculation of cost based index has been done. Purchase price of land which is
$3500 were added with the additional incurred expenses $1500. to find out the total cost base
indexed was $500 (Tang and Wan, 2015). Secondly the insurance claim which she has received
was $ 11000. The gross capital gain was $11000. According to the Capital gain section 45 (1A),'
The property purchase after 11.45 am on 21st September 1999 the indexation model applies in
which the exemption is given only in half amount of capital which is $ 11000.
Painting
3

In this scenario, the client has purchased the painting from a famous artist for $ 2000 on
2nd May. She has than sell her painting for $125,000 at an auction of April 3rd of the current year.
Below the calculation has been done for the capital gain.
Interpretation: In this scenario, according to above calculation, it can be clearly
observed that On May 1985 the purchase price of painting was $2000 with the GST amount of
5941.95. On April when she sold her painting by 125000 she got the profit of 119058.05 as per '
The property purchase after 11.45 am on 21st September 1999 the indexation model applies.
Shares
In this scenario , the client got the substantial share portfolio which she has taken over a
many year ago. The below listed tables provides the detailed information for the client purchase
of share and capital gain.
4
2nd May. She has than sell her painting for $125,000 at an auction of April 3rd of the current year.
Below the calculation has been done for the capital gain.
Interpretation: In this scenario, according to above calculation, it can be clearly
observed that On May 1985 the purchase price of painting was $2000 with the GST amount of
5941.95. On April when she sold her painting by 125000 she got the profit of 119058.05 as per '
The property purchase after 11.45 am on 21st September 1999 the indexation model applies.
Shares
In this scenario , the client got the substantial share portfolio which she has taken over a
many year ago. The below listed tables provides the detailed information for the client purchase
of share and capital gain.
4
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Interpretation
(I) In 2011, in the above solution the purchase price was 15, the quantity of commonwealth
shares was 1000 and stamp duty charges were 750, the total net cost was 15750. On July
18, sale price of share was 47 with the quantity of 1000 shares. On to which the
brokerage has been deducted and the net sales value was 46450. So in first case the
capital gain was $30700.
(II)In 2011, in the above solution the purchase price was 12, the quantity of PHB iron ore
Ltd shares was 2500 and stamp duty charges were 1500, the total net cost was 31500. On
July 18, sale price of share was 25 with the quantity of 2500 shares. On to which the
brokerage has been deducted which was 1000 and the net sales value was 61500 (Weber,
2014). So in second case the capital gain was $30000.
(III) In 2011, in the above solution the purchase price was 5, the quantity of young
kids learning Ltd shares was 1200 and stamp duty charges were 500, the total net cost
was 6500. On July 18, sale price of share was 0.5 with the quantity of 1200 shares. On to
which the brokerage has been deducted by 1000 and the net sales value was -400. So in
third case the capital loss was $6900.
(IV) In 2011, in the above solution the purchase price was 1, the quantity of shares of
share build LTD was 10000 and stamp duty charges were 1100, the total net cost was
11100. On July 18, sale price of share 2.5 with the quantity of 10000 shares (Ojong,
Anthony and Arikpo, 2016). On to which the brokerage has been deducted by $900 and
the net sales value was 24100. So in first case the capital gain was $53800.
Therefore, the overall net gain of the shares was $39900.
9
(I) In 2011, in the above solution the purchase price was 15, the quantity of commonwealth
shares was 1000 and stamp duty charges were 750, the total net cost was 15750. On July
18, sale price of share was 47 with the quantity of 1000 shares. On to which the
brokerage has been deducted and the net sales value was 46450. So in first case the
capital gain was $30700.
(II)In 2011, in the above solution the purchase price was 12, the quantity of PHB iron ore
Ltd shares was 2500 and stamp duty charges were 1500, the total net cost was 31500. On
July 18, sale price of share was 25 with the quantity of 2500 shares. On to which the
brokerage has been deducted which was 1000 and the net sales value was 61500 (Weber,
2014). So in second case the capital gain was $30000.
(III) In 2011, in the above solution the purchase price was 5, the quantity of young
kids learning Ltd shares was 1200 and stamp duty charges were 500, the total net cost
was 6500. On July 18, sale price of share was 0.5 with the quantity of 1200 shares. On to
which the brokerage has been deducted by 1000 and the net sales value was -400. So in
third case the capital loss was $6900.
(IV) In 2011, in the above solution the purchase price was 1, the quantity of shares of
share build LTD was 10000 and stamp duty charges were 1100, the total net cost was
11100. On July 18, sale price of share 2.5 with the quantity of 10000 shares (Ojong,
Anthony and Arikpo, 2016). On to which the brokerage has been deducted by $900 and
the net sales value was 24100. So in first case the capital gain was $53800.
Therefore, the overall net gain of the shares was $39900.
9

Violin
In this scenario the client has very much interest in playing violin. On May 21st she sold
her violin for $12000 which she has acquired it on 1st June 1999 for $5500. Below the calculation
of capital gain of violin has been done.
Interpretation
In the above solution, the cost of purchase of violin in June 1999 was $5500 and
she sells it of $ 12000. By removing the GST benefits she attain the capital gain of $2906.03.
1
In this scenario the client has very much interest in playing violin. On May 21st she sold
her violin for $12000 which she has acquired it on 1st June 1999 for $5500. Below the calculation
of capital gain of violin has been done.
Interpretation
In the above solution, the cost of purchase of violin in June 1999 was $5500 and
she sells it of $ 12000. By removing the GST benefits she attain the capital gain of $2906.03.
1
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