Taxation Law: CGT, Collectibles, and Personal Use Asset Analysis

This assignment provides a detailed analysis of whether specific items qualify as collectibles, personal use assets, or CGT assets under Australian taxation law. It references relevant sections of the ITAA 1997 to classify an engagement ring, shares in BHP, and a home, determining their tax implications based on cost and usage. The assignment emphasizes the importance of understanding these classifications for capital gains tax purposes and notes that while main residences are typically exempt from CGT, collectibles costing over $500 are considered CGT assets.

Running head: TAXATION LAW
Taxation Law
Name of the student
Name of the University
Authors Note
Course ID

1TAXATION LAW
Table of Contents
Answer to A:..............................................................................................................................2
Answer to B:..............................................................................................................................2
Answer to C:..............................................................................................................................3
References List:..........................................................................................................................4

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Answer to A:
According to “section 108-10 (2) of the ITAA 1997” collectibles refers to the artwork,
jewellery, an antique coin or medal. “Section 108-10 (2) of the ITAA 1997” also includes a
rare folio, any form of manuscript or book (Barkoczy 2014). A collectibles are mainly kept
for the taxpayers use and enjoyment. At the time of CGT event the collectibles are disposed
of in the form of set that will be taken as the single CGT asset for the purpose of threshold.
According to “section 108-10 (1) of the ITAA 1997” any form of capital loss that is
made from the collectibles are required to be offset from the capital gains made from the
collectibles. Additionally, of the “section 109-5 (1) of the ITAA 1997” defines CGT assets as
any assets that is acquired by the taxpayer (Coleman and Sadiq 2013). Collectibles that costs
more than $500 will be held as CGT assets. Similarly in the present scenario it can be stated
that the engagement ring cost $5000. Any form of collectibles that costs more than $500 will
be regarded as CGT assets. Therefore, the engagement ring will be classified as the “CGT
Assets” since it costs more than $500.
Therefore, an engagement ring that costs $5000 will be regarded as collectibles.
Answer to B:
According to the “section 109-5 (1)” a CGT asset is acquired by the taxpayer when it
becomes owned (Kenny 2013). The examples of the CGT asset includes;
a. Land and buildings
b. Any form of shares in company or units in any of the trust
c. Any form of options
d. Debts that is owned to the taxpayers
e. Any form of goodwill
f. Collectables that costs more than $500

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g. Any form of personal use assets that has cost more than $10,000.
Shares in company or units in the units trust are treated in the similar manner as any other
assets for the purpose of capital gains tax. Similarly in the present scenario, the shares that is
held in BHP will be classified as the “CGT assets”.
Answer to C:
According to the Australian taxation office the main residence of an individual is
usually exempted from the capital gains tax. In order to get the exemption for “home” the
property should be having a dwelling on it and an individual is required to live in that
property (Woellner 2013). Usually dwelling is regarded as an individual’s main residence if
an individual and their family lives in it, have their personal belongings in it and the address
where the mails are delivered. As evident in the current question “Your Home” qualifies as
the CGT assets.

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References List:
Barkoczy, S. 2014. Foundations of taxation law.
Coleman, C. and Sadiq, K. 2013. Principles of taxation law.
Kenny, P. 2013. Australian tax 2013. Chatswood, N.S.W.: LexisNexis Butterworths.
Woellner, R. 2013. Australian taxation law select 2013. North Ryde, N.S.W.: CCH Australia.