Question

Calculate Capital Gain/(Losses) for the following:

Rick advises you that he sold the following assets during the 2019 income year:

1. As previously indicated, Rick owns a number of Australian shares. On 17 September 2018, he purchased 100,000 Cardinal Resources Ltd shares under a contract of purchase for $4,200. Brokerage costs separately incurred on the same date came to $40. Later on 9 June 2019, Rick sold 60,000 of these shares for $3,240. Rick also paid brokerage fees of $20 in relation to the sale on this date. These shares were a non-active asset. Rick did not receive any dividends from these shares during the period of ownership.

(b)        On 2 February 2019, Rick's grandfather, Bob, aged 88, passed away. Under Bobs will, Rick inherited a vacant block of land at Maleny. Bob initially purchased this block of land on 11 August 1986 for $170,000. As at the date of Bob's death, the market value of this block of land was $280,000. On 19 May 2019, Rick sold the vacant block of land for $300,000 under a contract of sale. Incidental costs of disposal, including legal fees and sales commission totalled $5,760. Settlement occurred on 12 June 2019. The vacant block of land at Maleny was a non-active asset and no income was derived by Rick from this property during his ownership period.

(c)        On 28 December 2018, upon having a “spring” cleanout of the attic, Rick comes across an old 1962 Batman comic book. He remembers that he bought this comic book in a second hand comic book store in March 2004 for $10. To his great surprise, after some researching various comic books sites on the internet, he discovers that this comic book is now worth a fair bit of money. He quickly sets up an e-bay account and eventually sells this comic book on 6 April 2019 for $860 (gross). E-bay deducts a sales commission of $34.

(d)        On 6 October 2018, Rick sold a Chinese vase to his next door neighbour for $1,920. He initially acquired this vase on 4 May 2011 for $680. It has been sitting in his dining room at his home. It turns out that the vase dates back more than 600 years to the Ming Dynasty in China. There were no incidental costs of acquisition or disposal.

            Rick informs you that he has two carried-forward (unapplied) capital losses from prior income years. Firstly, there is a net collectable capital loss of $220 relating to the sale of a stamp collection in the 2016 income year. Secondly, there is a net capital loss of $5,200 relating to the sale of Virgin Australia Ltd shares in 2018.

            Rick wishes to minimise his capital gains tax payable wherever legally possible. Assume that Rick is not eligible to rollover any of part of the capital gain relating to any of the assets.

Answer 1

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