Question

Maria is an investor and over the years has acquired and disposed of a number of assets. She has kept records of all these transactions. During the year ended 30 June 2020, Maria disposed of several assets. As a result of these disposals, she made a number of capital gains and losses:

Profit on sale of trading stock $15000   

Loss on Disposal of motor vehicle $(5000)

Gain on Disposal of vacant block of land (acquired 1/9/19) $17000

Gain on sale of shares $4525

Loss on sale of shares $(2630)

Loss on Disposal of the caravan (cost $25000) $(5000)

Loss on Disposal of the antique watch (cost $4000) $(560)

Gain on Disposal of the investment property (acquired 24/12/2004) $162000

Capital losses carried forward from previous years:

Loss on Disposal of painting $1200

Loss on Disposal of Shares $12000

All assets, other than the land, had been owned by Maria for more than 12 months and had been acquired since December 1999.

Required:

Calculate the net capital gain that Maria should include in her tax return for the year ended 30 June 2020 and any losses that can be carried forward to future years.

Answer 1

Computation of net capital gain for Maria:

Particulars	Amount in $
Long term Capital Gain
Gain on sale of shares	$4525
Gain on Disposal of the investment property (acquired 24/12/2004)	$162000
Total LTCG	$166525
Adjustment of losses:
Loss on Disposal of the antique watch (cost $4000)	$(560)
carried forward loss on disposal of painting	$(1200)
Loss on disposal of shares	$(1240)
Short term Capital Gain
Gain on Disposal of vacant block of land (acquired 1/9/19)	$17000

Net capital Gain

$180525

Note: An amount upto $3000 can be deductible in the current year and all other capital losses shall be carried forward indefinitely.

The following losses can be carried forward:

1. Loss on sale of shares $13390.

The losses on sale of personal use asset are not deductible and therefore shall not be carried forward.

Particulars	Amount in $	Amount in $	Notes
Long term Capital Gain
Profit on sale of trading stock $15000			Trading stock is not a capital asset as per Section 1221 and are treated as ordinary assets. Therefore not to be taken into consideration
Loss on Disposal of motor vehicle		$(5000)	This loss shall not be off set with other gains as motor vehicle is a personal use asset and personal use assets are not deductible
Gain on Disposal of vacant block of land (acquired 1/9/19)		$17000	This is a Short term capital gain as held for less than 12 months.
Loss on Disposal of the caravan (cost $25000)		$(5000)	This loss shall not be off set with other gains as motor vehicle is a personal use asset and personal use assets are not deductible
Loss on Disposal of the antique watch (cost $4000)			Antique watch is a collectible item.