BA215 Taxation Law Assignment: Capital Gains Tax Analysis

This report analyzes a taxation law assignment concerning capital gains tax (CGT) in the context of a business sale. The assignment examines the tax implications of selling a business premise, goodwill, and trading equities. It details the calculation of capital gains and losses from various assets, including a house, shares, and depreciable items. The report considers the relevant tax rates applicable in Australia and explores exemptions to CGT obligations. The analysis includes a breakdown of acquisition costs, selling prices, and the resulting capital gains or losses for each asset. The final calculation determines the net capital gain, considering both gains and losses from the sale of different assets. References to relevant tax laws and publications are included to support the analysis.

TAXTION LAW 1
Taxtion law
Name
Professor
Institution Affiliation
Submission Date

TAXTION LAW 2
2
Having decided to resell his business housing Tanishiika received capital gain in
return of the sale of the premise and on the same time, he also received goodwill which
was a security of the buyer that Tanishka will not operate a similar business around the
same area. The capital gain which Tanishika received was as a result of the sale of a
capital asset which he used to generate revenue. Moreover, in Australia, any gain that
is realized from the sale of a capital asset is assessable for taxation purposes. Having
also received goodwill Tanishka will also be reliable for capital gain taxation. In addition,
the sale of trading equities will also be assessable for CGT.
On the decision to sell a business they are several tax consequences which may
apply. The tax obligation to be subjected to is determined by the type of income the
individual or business gets, whether cordially income or capital income. Any profit which
is realized after a sale of a business premise will in, most cases subjected to a capital
gain tax rates. Among the capital asset that Tanishka traded were the depreciable
medical trolley, the depreciable house, the rare manuscript, shares and also on
receiving goodwill he had also earned a capital gain (Walpole, M., 2010, pp.2010-49).
Though he might have to be exempted from CGT obligation n the sale of the rare
manuscript, the medical trolley and the 1000 shares he had bought from skullduggery
ltd, he was to be subjected to capital gain tax on the sale of goodwill as well as the sale
of a house which was used to generate revenue (Wallace, M., Hart, G. and Evans, C.,
2013, p.123). In most cases, the tax rate of capital gain never exceeds 15%. For the
individuals who belong in the tax bracket of 10-12% ordinary income, the CGT is taxed

TAXTION LAW 3
at 0%. Several exemptions on CGT exist which provides that a capital gain tax rate may
be more than 15% if;
1. The gain received from the sale of a capital asset as per section 1202 qualifies for a
small business stock the tax rate applied is 28%.
2. In cases where collectibles are the items or assets traded the tax rate is at a
maximum of 28% also.
3. A portion of section 1250 any un-recaptured gain from the sale of a capital asset as
per the provision of section 1250real property is subjected to a maximum rate of 28%
(Dean Crossingham, C.T.A, n.d)
The net capital gain received from the sale of the business premise is as follows;
The acquisition cost of the house $400,000
Selling price $1,000,000
Goodwill $50,000
Total capital gain $650,000
Resulting from the sale of trading security
1000 Bamboozle Ltd shares
Acquisition price $20,000

TAXTION LAW 4
Selling price $37,000
Total capital gain $17,000
1000 Skullduggery Ltd shares
Acquisition price $141, 000
Selling price $74,000
Total capital loss $67,000
Rare manuscript
Acquisition price $19,000
Selling price $11,000
Total capital loss $8,000
Medical Trolleys which was a depreciable asset
Acquisition price $6,000
Selling price $1,000
Total capital loss $5,000
B
The net capital gain of tanshka can be calculated as follows

TAXTION LAW 5
All the net capital gains (minus) all the net capital losses
Capital gains were as a result of;
Sale of the business premise resulting in a total gain of $650,000, secondly, the sale of
1000 Bamboozle Ltd shares resulting in a total capital gain of $17,000.The total capital
gains were $667,000.
The capital losses were as follows; the sale of Medical Trolleys which was a depreciable
asset
Resulting to a loss of $5,000, sale of the rare manuscript leading to a loss of $8,000,
finally, from the sale of 1000 Skullduggery Ltd shares which result6ed to a capital loss
of $67,000. The total losses amounted to, $80,000. The net capital gain of Takshka was
(667,000-$80,000) =$587,000.

TAXTION LAW 6
References
Dean Crossingham, C.T.A.(n.d), Tax and the sale of a pre-CGT business.
Wallace, M., Hart, G. and Evans, C., (2013). An evaluation of the contribution of Justice
Hill to the provisions for the taxing of capital gains in Australia. Austl. Tax F., 28,
p.123.
Walpole, M., (2010). Goodwill and taxation issues. UNSW Law Research Paper, (2010-
49).