Bowens Pty Ltd Case Study - Capital Gain or Net Capital Loss - Law Assignment Help

Assignment Task :

Week 7 Alex is a carpenter who purchased a vacant block of land in Sydney on 1 October 1980. On 1 September 1986, Alex built a house on the land. At the time, the land was valued at $110,000 and the cost of construction was $100,000. Immediately, after the construction finished, the property has been rented out. On 1 March 2019, Alex sold the property at auction for $1,400,000. 
Required:

With reference to relevant legislation/case law, determine:

a) Alex's net capital gain or net capital loss for the year ended 30 June 2019 using both Discount method and Indexation method.

b) How would your answer to a) differ if the owner of the property was a company instead of Alex? 
 

Week 8 Bowens Pty Ltd is a building materials supplier in Victoria. Bowens Pty Ltd has an annual turnover of $24 million, and works under the accrual method of accounting. Bowens Pty Ltd purchases concrete mixer for $660 each from Builder's Choice Pty Ltd, a company in Geelong with an annual turnover of around $21 million, and works under the accrual method of accounting. Bowens Pty Ltd plans to sell the concrete mixers at a 200% mark-up to its customers. In October last year it purchased 110 concrete mixers but in December they discovered that 12 of the concrete mixers were faulty and subsequently returned these faulty concrete mixers to the manufacturer, obtaining a full refund. Assume both apply the accrual method of accounting. 

Required: With reference to relevant laws, discuss the GST consequences of this arrangement for both Bowens Pty Ltd and Builder's Choice Pty Ltd. 
 

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