Question

James is 49 years old and currently working in a multinational company. During 2019-2020 tax year he sold some of his assets and trying to work out his total capital gain.:

• He bought an investment property for $250,000 under a contract dated 24 June 2009. The contract provided a payment of a deposit of $75,000 on that date, with the balance of $175,000 to be paid on the settlement on 5 August 2009. He paid stamp duty of $25000 on 20 July 2009. On 5 August 2009, he received an account for solicitors’ fees of $5000, which was part of the settlement process. He paid this fee.

He sold the property on 15 October 2019 for $415,000. To process, the sale James incurred $1500 in solicitor’s fees.

• James sold some of his antique collections for $20000 which he purchased during the year 2002 for $8000.
• He also made a capital loss from selling some of his personal use assets. Total loss from these sales were $7000

Required:

Consider the above information given by James (Australian resident for tax purposes) and analyze his current position for capital gain tax. In your analysis, you MUST explain each of the above CGT events and its impact on the total capital gain calculation.

Answer 1

Solution:

Name Of Assessee:                                 Mr. James                                 Status                     :                                   Individual.

Assesment Year    :                                       2009.

Mathod Of Calculation Of Capital Gain : Discount Mathod.                                                                  

Particulars	Amount in ($)	Amount in ($)
Sale Price Of Asset		415000.00
Less: Selling Exp. (Solicitor Fees)		(1500.00)
Net Sale Price (A)		413500.00
Less Cost Of Purchase Of Property:
Purcahse Price	250000.00
Stamp Duty Paid	25000.00
Solicitor Fees Paid	5000.00
Total Cost Of Property (B)	280000.00
Capital Gain (A-B)		133500.00
Add : Capital Gain From Sale of Antique Pieces		12000.00
($20000-$8000)
Total Capital Gain		145500.00
Less: Capital Loss		(7000.00)
Net Capital Gain		138500.00
Less: Discount @ 50% on 138500 (Note-1)	`	(69250.00)
Total Taxable Capital Gain		69250.00

Note:1

Mr. James hold selling properties more than one year, Hence: as per rule Australian Income tax Act "The Net Capital Gain" is dicounted by 50% in the case of an individual.