BX3112 Taxation Law Exam: CGT, Partnership Income, Trust & Dividends

This assignment provides a detailed analysis of various taxation aspects, including capital gains tax (CGT) events related to the sale of real estate, investment property, and shares, as per the ITAA 1997. It includes calculations of capital gains, considering cost base adjustments for renovations and legal fees. The assignment also examines partnership income taxation, focusing on the allocation of net income to partners and the treatment of salaries paid to partners. Furthermore, it addresses the taxation of trust income in the hands of beneficiaries and includes calculations related to dividend income, franking credits, and overall tax payable. The assignment references specific sections of the Income Tax Assessment Act 1936 and 1997 and taxation rulings to support its analysis.

Running head: TAX
Tax
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Answer to Question 1.................................................................................................................1
Answer to Question 2.................................................................................................................3
a).............................................................................................................................................3
c).............................................................................................................................................3
d)............................................................................................................................................4
e).............................................................................................................................................4

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Answer to Question 1
As per the provisions of the section 100-20 of the ITAA 1997 the sale of the
investment property, shares and the real estate property will all be considered as CGT events.
As per the provisos of the section 110-25(3) of ITAA 97 the cost base of the asset
should include the cost of acquisition and the cost of disposal.
As per the provisions of the section 110-25(4) of ITAA 97 the cost incurred in respect
of the renovation of the property should be added to the cost base of the property.
The detailed calculation of the capital gains of the entity is being given out in the
section 100-45 of the ITAA 97.
Statement showing calculation of Capital gain
Particulars Amount Amount
Real estate property $950,000.00
legal fees $4,500.00
real estate agent commission $45,000.00
Selling and distribution $2,500.00
Net capital proceeds $898,000.00
Cost of the property $350,000.00
legal fees $1,500.00
Stamp duty $9,500.00
cost of renovation $250,000.00
Cost base $611,000.00
Gross capital gain $287,000.00
Less:
Discount @ 50% 143500.00
Net capital gain $143,500.00
Loss on sales of investment property $180,000.00
Capital gain on sales of shares $225,000.00
Total Net capital gain $188,500.00

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Answer to Question 2
a)
as per the taxation ruling 2005/7 under para 7 the net income of the partenrshiop
firm will not be containing the salary being paid to the partners .
Calculation of Net Income
Particular Amount
Profit of partnership $325,000.00
Wages of partner $150,000.00
Net Income $475,000.00
b)
as per the section 92(1) of the income tax assessment act 1936 the income of the
partners should be including the profits that have been earned by the partnership.
Net income allocation to each partner
Particulars Amount
Net Income $475,000.00
share proportion 50%
Net income allocated to partner $237,500.00
c)
as per the section 97(1) of the income tax assessment act 1997 the income that is
earned by the trust is taxable in the hands of the beneficiary.
d)
The assessable income must include the income from the trust and the normal rate of
tax must be made applicable on it.
e)
Calculation of dividend

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Particulars Amount
Dividend received $135,000.00
Gross dividend $190,812.72
Section of dividend taxed $55,812.72
f)
Calculation of Tax payable
Particular Amount
Net Income from partnership $237,500.00
Dividend Income $135,000.00
Total Assessable income $372,500.00
Tax payable $140,857.00
Franking credit $55,812.72
Net Tax payable $85,044.28

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