Luke and Sarah lived in a house in Albury where they both had permanent jobs. In July 2012 they purchased a rural block of 30 acres for $160,000 with the intention of building a house and moving out of town. In September 2012 they listed their house in Albury for sale at $570,000, however given a downturn in the market the house remained unsold until March 2014 when they finally accepted an offer of $460,000. Settlement took place in April 2014 and they commenced construction on the new house in May 2014. Whilst the house was being built Luke and Sarah rented the Albury house back from the new owners at an amount of $480 per week.

In November 2014 the new house was completed at a cost of $410,000 and Luke and Sarah moved in. Additional costs incurred by them included construction of a road for $15,000, sinking a dam at a cost of $30,000 and connection of electricity at a cost of $40,000. They financed the new property with a home loan of $450,000 payable over 30 years at a rate of 4.20%.

Luke and Sarah began a horse agistment business in January 2015 to which they allocated 20 acres of their property. They constructed fencing to create smaller paddocks, built shade shelters and installed water troughs at a total cost of $80,000. To fund the cost of the improvements they took out a small business loan for $80,000 payable over 10 years at a rate of 5.30%.

In October 2019, Luke was offered a promotion in his job which required them to re-locate to Queensland. They listed the rural property for sale and in December 2019 it sold for an amount of $850,000 with settlement occurring in January 2020 at which time Luke and Sarah moved to Queensland.

Required

Advise Luke and Sarah of the taxation consequences of selling the rural property including whether any taxation exemptions or concessions may apply. You do not need to calculate the amount of any resulting capital gain or loss.

NOTE: this question require answer in ILAC ESSAY format which should include the tax law applicable as per AUSTRALIAN TAXATION LAW in various situation mentioned in question along with appropriate example of cases. no calculation required. this question is related to the Taxation Law subject

Question 1

Luke and Sarah lived in a house in Albury where they both had permanent jobs. In July 2012 they purchased a rural block of 30 acres for $160,000 with the intention of building a house and moving out of town. In September 2012 they listed their house in Albury for sale at $570,000, however given a downturn in the market the house remained unsold until March 2014 when they finally accepted an offer of $460,000. Settlement took place in April 2014 and they commenced construction on the new house in May 2014. Whilst the house was being built Luke and Sarah rented the Albury house back from the new owners at an amount of $480 per week.

In November 2014 the new house was completed at a cost of $410,000 and Luke and Sarah moved in. Additional costs incurred by them included construction of a road for $15,000, sinking a dam at a cost of $30,000 and connection of electricity at a cost of $40,000. They financed the new property with a home loan of $450,000 payable over 30 years at a rate of 4.20%.

Luke and Sarah began a horse agistment business in January 2015 to which they allocated 20 acres of their property. They constructed fencing to create smaller paddocks, built shade shelters and installed water troughs at a total cost of $80,000. To fund the cost of the improvements they took out a small business loan for $80,000 payable over 10 years at a rate of 5.30%.

In October 2019, Luke was offered a promotion in his job which required them to re-locate to Queensland. They listed the rural property for sale and in December 2019 it sold for an amount of $850,000 with settlement occurring in January 2020 at which time Luke and Sarah moved to Queensland.

Required

Advise Luke and Sarah of the taxation consequences of selling the rural property including whether any taxation exemptions or concessions may apply. You do not need to calculate the amount of any resulting capital gain or loss (Australian Tax Law)

Answer should write on ILAC style of essay writing and Names of cases or statutes should be italicised, and followed by the jurisdiction not in italics, for example: Acts Interpretation Act 1901 (Cth).  

1) Government statisticians at the _______________ calculate the Consumer Price Index.

Select the correct answer below:

a) Federal Reserve

b) International Monetary Fund

c) U.S. Bureau of Labor Statistics

d) U.S. Treasury Department

2) Which of the following contribute to an individual's human capital?

Select the two correct answers below.

Select all that apply:

a) skills

b) personal beliefs

c) expertise

d) personal preferences

3) Which of the following are not examples of individuals in the labor force?

Select the two correct answers below.

Select all that apply:

a) accountants

b) those receiving unemployment benefits

c) retirees

d) stay at home mothers

4) GDP includes spending on medical care, but does not address ________________, which indicates that GDP has limitations when it comes to measuring the well-being of society in terms of health.

Select the two correct answers below.

Select all that apply:

a) whether life expectancy has risen or fallen

b) how difficult it is to become a doctor

c) high pharmaceutical costs

d) whether infant mortality has risen or fallen

5) On the subject of the "New Economy" controversy, pessimists argue that _______________.

Select the correct answer below:

a) there is no real proof that productivity is higher than it's been previously

b) even five or ten years of stronger productivity growth does not prove that higher productivity will last for the long term

c) current productivity growth is only sustainable with careful regulation of technology

d) the extraordinary advances in communications and information technology of the 1990s will generate higher average productivity growth for decades to come

Robots in the factory and price rise for suppliers as Maleny Dairies invests

Consider the following scenario:

Your good friend Kyle would like to go back to school to complete a bachelor’s degree in Early Childhood Education so that he can fulfill his dreams of teaching 2nd grade. Years ago, he started college, but work and life responsibilities got in the way of him finishing. He knows that you recently enrolled at Ashford University and wants to ask your advice as he plans his next move. In order to help pay for his tuition, he plans to borrow student loans. Kyle tells you that he wants to borrow the maximum amount of available loan money to buy his kids new shoes and go on a vacation to Hawaii.

Based on the scenario above, address the following:

• Describe a potential repercussion of borrowing the maximum amount of student loans / available loan money.

Eric left high school to work in a factory where he has been for the last 9 years. He married at 19 and has 2 children. He is unhappy and cynical. He doesn't like working hard to make purchase decisions so he waits until a product is easy to find before he buys. multiple choice

-late majority

-innovator

-early adopter

-early majority

-laggard

Brandon is a successful professional. He is a divorced father of a 10 year old. He is confident due to his award-winning work on the college debate team. He is conscious of fashion and is meticulous about his clothes. He subscribes to numerous trade and specialty magazines. He loves to tell others about the new products he buys.

Innovator

early adapter

early majority

late majority

laggard

Iggy’s is 15 years old and lives in New Hampshire. She is a student, does not work, and plans to enter college once she graduates high school when she is 18 years old. Her grandparents want to be able to help her pay for college. They currently own shares of stock that could be used to pay for her education. What is the best option tax wise for them to make this gift to Iggy?

• A :

  Make a transfer of the stock under the UGMA, which would not require taxes to be paid by either Iggy or her grandmother.

• B :

  Make the gift to Iggy as soon as possible to save paying taxes on the gain of the stock.

• C :

  Her grandparents cannot make a gift to Iggy because she is only 15 years old.

• D :

  Open a custodial IRA account and transfer the shares of stock to the account.

Most people have several jobs over their lifetimes. Give a brief description of two or more of the jobs you’ve already had. Without revealing private information, explain if the job was part-time or full-time and address the following questions.

• What skills were required to perform your best?

  • To what extent were agility, problem solving, and technology skills necessary for success?

• What skills did you learn in each job?

  • How did learning these skills contribute to improving your ability to be effective in your work?

• Did these new skills increase your human capital?

• If you haven’t yet had a job, describe the type of career you hope to have after finishing school.

  • How will agility, problem solving, and technology skills be a vital part of your success in this type of career?

Discreet Math Question:

Suppose you have 100 students in school. Principal wants to take photos in different ways so that every student thinks they have been treated fairly.

1.She wants to divide 100 students into groups of 10 and take one photo of each group. So no student is in more than one photo and she doesn't care how they are lined up. How many photo are going to need to be taken in this situation?

2. She has a new idea that includes three of the schools teachers. She still wants to divide the 100 students into groups of 10. With each student, they will take a picture with every possible way to choose two of the three teachers, with one on the left and other on the right (So Order Matters). How many photos are going to be needed in this situation?

Most people have several jobs over their lifetimes. Give a brief description of two or more of the jobs you’ve already had. Without revealing private information, explain if the job was part-time or full-time and address the following questions.

• What skills were required to perform your best?

  • To what extent were agility, problem solving, and technology skills necessary for success?

• What skills did you learn in each job?

  • How did learning these skills contribute to improving your ability to be effective in your work?

• Did these new skills increase your human capital?

• If you haven’t yet had a job, describe the type of career you hope to have after finishing school.

  • How will agility, problem solving, and technology skills be a vital part of your success in this type of career?