Eric had bought some assets which he sold during the same year. The details of the assets bought and sold during the year were as follows-
|
Assets |
Purchasing price |
Selling Price |
|
An antique vase |
$2,000 |
$3,000 |
|
An antique chair |
$3,000 |
$1,000 |
|
A painting |
$9,000 |
$1,000 |
|
A home sound system |
$12,000 |
$11,000 |
|
Shares in a listed company |
$5,000 |
$20,000 |
The issue is to compute taxable amount for occurred Capital Gain Transactions.
Australian taxation provisions states that if holding period of assets is less than 12 months then capital gain tax will be computed by making use of “Other method” in which cost is deducted from sales price (Barkoczy, 2016).
As per the given case; Eric had bought assets which he sold during the same year due to which holding period for assets will be lesser than 12 months
|
Capital Gain (selling price- purchasing price) |
|
|
Asset |
Amount in $ |
|
Shares in a listed company ($20000-$5000) |
$15000 |
|
Antique vase ($3000-$2000) |
$1000 |
|
Total Loss |
$16000 |
|
Capital Loss (selling price- purchasing price) |
|
|
Asset |
Amount in $ |
|
Antique chair ($1000-$3000) |
$2000 |
|
Painting ($1000-$9000) |
$8000 |
|
Home sound system ($11000-$12000) |
$1000 |
|
Total Loss |
$11000 |
From the above calculation it can be concluded that the net capital gain for Eric for the current year is $5000 (Total capital gain –Total capital loss) on which will be taxable.
According to given case bank executive-Brian who borrowed loan on 1 April 2016 as a part of his remuneration package of $1m which payable after three years in monthly instalments at a rate of 1% p.a. Brian used 40% of the loan amount for the purpose of generating income. All the monthly obligations related to interest payment have been met by Brian. Calculating taxable amount for fringe benefits that arise on account of Brian is the main purpose of the task by considering consequence if the total accrued interest is to be payable at the end of the year and consequence if Brian is relieved from paying the interests.
. Fringe benefits can be said as the amount that is payable to employees over and above their salary. The provisions available also contain rules for valuation for each benefit (Barkoczy, 2016). In terms of loan at special rate; taxable value for fringe benefits is calculated by determining the difference between the payable interest rate by the borrower and interest as per statutory interest rate. The statutory tax rate for the year was 5.65%.
The taxable value of fringe benefit-
|
=$56500**-$10000*= $46500 Interest in accordance with statutory rate – The interest actual paid |
|
proportion of loan used for income generating purpose =$46500 *40% =$18600 |
|
*Amount of loan * rate of interest =$1000000*1% =$10000 |
|
** Amount of loan * statutory rate of interest =$1000000*5.65% =$56500 |
Taxable amount will not be altered if the total accrued interest is to be payable at the end of the year. The entire amount of interest will be taxable if Brain is released to pay the interest on loan.
Issue in this case is to determine the gain or loss to be allocated for Jack and Jill, who are joint tenants and have borrowed money for the purchasing a rental property. As per the written agreement executed between them, Jack’s share in profit is 10% whereas it is 90% in case of Jill. Jack is entitled for 100% loss. In the past year there was a loss of $10,000.
As per the Australian taxation provisions TR 93/32; the terms specified in the partnership deed will be taken into consideration, if the operations of business are done on regular basis (Mackie, Histed and Page, 2011). Thus, the specified terms by the co-owners of rental premises will not be taken into consideration for distributing the profits and losses.
In accordance with the provision of Australian Tax Provisions; no partnership deed can be executed between spouses as they do not carry on business on regular basis. Further, renting premises cannot be said as conducting business; thus their partnership is not eligible for income tax purpose. Further, profit and loss should be apportioned on equal basis i.e. 50: 50. Same provisions will be applicable if cited property is sold by parties.
In this cited case, Duke obliged to his servant and gardener to make payment of an additional amount if they serve more services to him. Duke stated the promise and wrote it an agreement in that both the gardener and duke agreed and signed. However, gardener did not receive any payment from duke; it was found that duke received an additional deduction from the taxation purpose.
Every person has right to maintain lawful agreements for their associations which are suitable for tax liability reduction (Esmaeii and Grigg, 2016).
It was concluded that the purpose of scheme was to get rid of tax liability and as previously there were not such justification (Tax Evasion, Avoidance or Mitigation: That is the question, 2012). Thus with this law; leniency for selection arrangements has been provided to assesse and specified measures has been developed for future reference to ensure prevention of ambiguity.
Bill is an owner of land use for the purpose of grazing. He further intends to use it extraction for pine trees in against to generate $1,000/100 meters. Would these receipts be considered for taxation? If he receives a lump sum amount $50,000 by the logging company will the tax implications change?
According to TR 95/6- the income arising as a result of disposal of planted trees (not in the ordinary course of business) is a taxable during the same year. The point to be considered here is that the tress must be the subject matter of business or just a part of it (Barkoczy, 2010). The value of trees is to be valued on the market rate on the date of disposal. Moreover, the royalty received by the Bill against the right given to the logging company procuring timber would be considered for the purpose of taxation, even if the selling of right is not in the normal course of business for Bill. The form in which the amount is received (lump sum or installments) does not seem to have any impact on the taxation implications.
References
Barkoczy, S., (2010). Australian Tax Casebook. CCH Australia Ltd.
Barkoczy, S., (2016). Core tax legislation and study guide. OUP Catalogue.
Barkoczy, S., (2016). Foundations of Taxation Law 2016. OUP Catalogue.
Esmaeii, H. & Grigg, B., (2016). The Boundaries of Australian Property Law. CUP.
Mackie, K., Histed, B. E. & Page, J., (2011). Australian Land Law in context. OUP.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download