TAXATION, THEORY, PRACTICE & LAW Case study 1: Capital Gains Tax

TAXATION, THEORY, PRACTICE & LAW
Case examine 1: Excellent Establishs Toll
Fred is a inhabitant who verified a coercionm to vend his idleness settlement in the Blue Mountains in August conclusive year. The sale was permanent in February this year when Fred ordinary $800,000 from the acquisitionr. Fred incurred lawful fees of $1100 (Inclusive of GST) and true demesne agent’s embassy of $9,900 (Inclusive of GST) in pertinency to the sale. Fred acquisitiond the idleness settlement in March 1987 coercion $100,000 and hired $2,000in genus service on the exchange and $1000 in lawful fees. In January 1990, Fred affianced a designer to build a garage on the characteristic coercion $20,000,
Calculate Fred’s allure excellent establish coercion the unconcealed year. Suppose he also has a allure excellent dropping from conclusive year of $10,000 arising from the sale of shares.
Would your tally be opposed if the dropping arose from the sale of an ancient vase?
(10 marks, max. 800 suffrage).
Case examine 2: Fringe Benefits Toll
Periwinkle Pty Ltd (Periwinkle) is a bathtub constructionr which vends bathtubs undeviatingly to the national. On 1 May 2015, Periwinkle granted single of its employees, Emma, with a car as Emma does a cetune of locomotive coercion effect purposes. However, Emma’s usage of the car is referable restricted to effect singly. Periwinkle acquisitiond the car on that duration coercion $33,000 (including GST).
Coercion the continuance 1 May 2015 to 31 March 2016, Emma travelled 10,000 kilometres in the car and incurred expenses of $550 (including GST) on less repairs that enjoy been reimbursed by Periwinkle. The car was referable used coercion 10 days when Emma was interstate and the car was parked at the airport and coercion another five days when the car was scheduled coercion annual repairs.
On 1 September 2015, Periwinkle granted Emma with a hypothecation of $500,000 at an profit reprove of 4.45%. Emma used $450,000 of the hypothecation to acquisition a idleness settlement and lent the cherishing $50,000 to her wife (profit playing) to acquisition shares in Telstra. Profit on a hypothecation to acquisition secret effects is referable deductible period profit on a hypothecation to acquisition income-producing effects is deductible.
During the year, Emma acquisitiond a bathtub pretended by Periwinkle coercion $1,300. The bathtub singly require Periwinkle $700 to construction and is sold to the unconcealed national coercion $2,600.
(a) Advise Periwinkle of its FBT consequences arising extinguished of the aloft knowledge, including regard of any FBT burden, coercion the year result 31 March 2016. You may suppose that Periwinkle would be entitled to input toll credits in pertinency to any GST-inclusive acquisitions.
(b) How would your tally to (a) dissent if Emma used the $50,000 to acquisition the shares herself, instead of lresult it to her wife?
(10 marks, max. 800 suffrage).

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