ACCG3020 - Taxation Law And Practice Possible CGT Implication - Accounting And Finance Assignment Help

Assignment Task -

Additional information: 

1) Accounts receivable as at 30/6/2019 Nil  

2) Trading stock on hand – 1/7/2019 Nil  

Trading stock on hand – 30/6/2020  

Cost $120,000  

Replacement cost $165,000  

Market selling value $350,000 

Trading stock account doesn’t include the stock costing $25,000 that is yet to be  delivered because it is still on a freighter at sea. BFF holds the bill of lading for the  trading stock and delivery to the warehouse is expected on 1 July 2020. 

3) Mr and Mrs Baldwin decided to relocate its business operations to Singapore from 30 June 2020 and sold the following assets:  

- Business premises: acquired on 1 May 2000 for $2,620,000 which included  the administration office, factory and warehouse. Entered into a contract on 20  June 2020 to sell for $4,500,000. The legal fees and agent fees on the sale  totalling was $225,000. The sale was settled, and the capital proceeds received  on 30 July 2020.  

- Residential premises: acquired from Mr & Mrs Baldwin for $1,100,000 on 10  February 2014. However, a registered valuer had advised BFF that the market  value of the premises was only $750,000 at the time. Entered into a contract  on 1 June 2020 to sale for $2,300,000. The legal fees and agent fees totalling  $115,000. The sale was settled, and the capital proceeds received on 1 July.  

Required:

1) Advise Mr and Mrs Baldwin on what amounts may be included in BFF’s  assessable income for the 2019/20 tax year (Assuming Mr and Mrs Baldwin want  to minimise BFF’s taxable income and BFF is not small business entity).

2) Calculate BFF’s assessable income for the year ending 30 June 2020.

3) Mr and Mrs Baldwin decided to relocate to Singapore indefinitely and left Australia  on 30 June 2020 to set up their business. In addition to their shares in BFF as at 30 June 2020, Mr and Mrs Baldwin also own their investment property, a vintage motor  vehicle (built in 1950), art collection and 2,000 units in ABC trust, a large publicly  listed commercial property trust.  

Explain the CGT consequences of the relocation to Singapore assuming Mr and  Mrs Baldwin would be considered foreign residents of Australia for the tax  purposes from 30 June 2020.

4) The business is flourishing and expanding rapidly in Singapore. Mr and Mrs Baldwin  received an offer on 1 February 2021 to sell their shares in BFF for $100,000 per  share. Mr and Mrs Baldwin also sold their artwork for a capital loss of $35,000 in the  same tax period.  

Explain the possible CGT implications if they accept the offer to sell their shares  in BFF.

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