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

Case consider 1: High Fashions Assessment
Fred is a inhabitant who authorized a narrow to retail his idleness residence in the Blue Mountains in August developed year. The sale was permanent in February this year when Fred accepted $800,000 from the lapser. Fred incurred allowable fees of $1100 (Inclusive of GST) and actual restrainttune agent’s deputation of $9,900 (Inclusive of GST) in agreement to the sale. Fred lapsed the idleness residence in March 1987 restraint $100,000 and paid $2,000in cast province on the give and $1000 in allowable fees. In January 1990, Fred betrothed a constructor to construct a garage on the goods restraint $20,000,
Calculate Fred’s enmesh high fashion restraint the ordinary year. Suppose he to-boot has a enmesh high waste from developed year of $10,000 arising from the sale of shares.
Would your defense be divergent if the waste arose from the sale of an ancestral vase?
(10 marks, max. 800 language).
Case consider 2: Fringe Benefits Assessment
Periwinkle Pty Ltd (Periwinkle) is a bathtub moldingr which retails bathtubs undeviatingly to the open. On 1 May 2015, Periwinkle granted single of its employees, Emma, with a car as Emma does a fate of locomotive restraint effect purposes. However, Emma’s custom of the car is referable esoteric to effect singly. Periwinkle lapsed the car on that determination restraint $33,000 (including GST).
Restraint the end 1 May 2015 to 31 March 2016, Emma travelled 10,000 kilometres in the car and incurred expenses of $550 (including GST) on unimportant repairs that enjoy been reimbursed by Periwinkle. The car was referable used restraint 10 days when Emma was interstate and the car was parked at the airport and restraint another five days when the car was scheduled restraint annual repairs.
On 1 September 2015, Periwinkle granted Emma with a hypothecation of $500,000 at an curiosity-behalf reprimand of 4.45%. Emma used $450,000 of the hypothecation to lapse a idleness residence and lent the retaining $50,000 to her mate (curiosity-behalf permitted) to lapse shares in Telstra. Curiosity-behalf on a hypothecation to lapse retired possessions is referable deductible timeliness curiosity-behalf on a hypothecation to lapse income-producing possessions is deductible.
During the year, Emma lapsed a bathtub fabricated by Periwinkle restraint $1,300. The bathtub singly require Periwinkle $700 to molding and is sold to the open open restraint $2,600.
(a) Advise Periwinkle of its FBT consequences arising extinguished of the overhead knowledge, including vigilance of any FBT jurisdiction, restraint the year effect 31 March 2016. You may suppose that Periwinkle would be entitled to input assessment credits in agreement to any GST-inclusive acquisitions.
(b) How would your defense to (a) contend if Emma used the $50,000 to lapse the shares herself, instead of leffect it to her mate?
(10 marks, max. 800 language).

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