ACC708 - Capital Gains Tax - Law Assignment Help

Assignment Task

Revision questions arising from material covered in lectures.

If further facts are needed when answering the following problems, students should state what they are and why these facts are needed. The discussion should include an analysis of the pertinent sections of the relevant legislation, rulings and the relevant case law.
Multiple Choice Questions - For each of the following select the most correct answer.

Which of the following equations is most correct?

• Net capital gain = current year gains + gains from previous years
• Net capital gain = current year gains - current year losses - losses of previous years
• Net capital gain = current year gains - losses of previous years
• Net capital gain = current year gains - current year losses + losses of previous years
• Net capital gain = (current year gain - discount on gain - current year losses)

Which of the following is not a requirement of a CGT event?

• A CGT asset
• Acquisition after 20 September 1985
• A sale
• A disposal
• None of the above

Assets not exempted from capital gains tax include:

• A motorcycle
• Personal use assets acquired for $15,000
•  A coin acquired 1September 2002 for $470 kept for personal enjoyment
• A share investment acquired before 20 September 1985
• All of the above are exempt

The second element of the cost base of a CGT asset would include:

• Property market value
• Non-capital costs of owning an asset incurred after 21 August 1991
• A deck built on a residential investment property
• Stamp duty
• None of the above

The fourth element of the cost base of a CGT asset would include:

• Property market value
• Non-capital costs of owning an asset incurred after 21 August 1991
• A deck built on a residential investment property
• Stamp duty
• None of the above

Discussion and Calculation Questions

Bella Neal wins a seat in Parliament and transfers to Canberra. Before moving, Bella sold the following assets:

Question 1

All assets were purchased on 1 July 2000 and sold on 30 June 2019. There are no other relevant transactions affecting her taxable income for the tax year ending 30 June 2019. Required: Calculate Bella’s Net Capital Gain.

Question 2
Bella Neal wins a seat in Parliament and transfers to Canberra. Before moving, Bella sold the following assets: All assets were purchased on 1 August 2018 and sold on 30 June 2019. There are no other relevant transactions affecting her taxable income for the tax year ending 30 June 2019. Required: Calculate Bella’s Net Capital Gain.

Question 3

On 15 January 1981 John bought a property to use as his home. The home cost him $120,000. He lived in it for the entire period of time he owned it. He paid $2,000 in stamp duty in January 1981. He sold the property for $320,000 in October 2018 as he intended to move overseas. He paid commission of $4,600 to the real estate agent and advertising costs of $400. These expenses were paid in October 2018. Required: Calculate John’s Net Capital Gain. 

Question 4

On 10 August 1990 John bought a holiday home which he used every weekend. The property was never leased out. The property cost $150,000. He consulted with his accountant regarding the purchase and this advice cost him $500 in August 1990. In addition he paid stamp duty of $3,150 in August 1990. John used a loan to acquire the property and paid $250 stamp duty on the loan in October 1990. The property was sold in September 2018 for $280,000. Costs associated with the sale include commission of $6,750 paid to the real estate agent who sold the property and advertising of $600. Both of these expenses were paid in September 2018. In December 1994 John’s next-door neighbour, Shane Sutcliffe, disputed the placement of the fence and considered that some of the land on John’s side of the fence was in fact his land. It cost John $2,000 in various fees and costs to prove that the fence was correctly placed. Shane did not pay any of John’s costs.

• John incurred the following expenses in relation to his holiday home:
• Interest on the loan totalling $25,800.
• Insurance costs over the period of ownership costing $3,500.
• Stairs leading to the second storey were repaired at a cost of $1,800.
• Rates and land tax of $6,900 in total were paid during ownership of the property.
• Interest of $3,000 was paid since October 1996 when John obtained a personal loan to refurbish the kitchen and bathrooms at a cost of $25,000.

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