This 19 page paper examines a case study assessing a Capital Gains Tax position using Australian Capital Gains Tax Legislation. The paper uses a case supplied by the student, where an asset is bought, changed, improved and then sold for cash and shares. Each event is examined and the impact on the CGT assessment is explained. The bibliography cites 8 sources.
Name of Research Paper File: TS14_TEaucgtcase.rtf
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calculated with the sale price, less the acquisition price and any allowances such as indexation or discounts and other losses. The gain is then added to the income of the
tax payer and taxed at their marginal rate. The capital gains calculation take place when a chargeable event occurs. Events are usually the sale or transfer of an asset.
These are the basics that need to be applied when assessing the tax liability of Dirk Diggler who first purchases a property in 1985. To look at this case study
we will work out way though the events that occur and assess their impact on the capital gains position that is seen at the end. Where relevant the different potential
choices or scenarios are discussed and indication of the choices are given. To assess the way capital gains liability we first have
to assess the base cost as it is only after this we can assess the gain. This property purchased is a corner building. We are told that when purchasing
it the price was $350,000. We are not told the purpose of this purchase at this stage. If this wee the purchase of a property that would be a
main residence this would be exempt form capital gains tax. In 1987 he gains a liquor license for the property and employs staff.
This means at this point there is certainly a commercial property. If the former status was resident then the capital gains liability will start from this point only.
However, if he had been living elsewhere and this property was not the main residence then there would be no period of exemption.