Calculate freds net capital gain for the current year

Assignment Help Taxation
Reference no: EM131187476 , Length: word count:2000

Case study 1: Capital Gains Tax

Fred is a resident who signed a contract to sell his holiday home in the Blue Mountains in August last year. The sale was settled in February this year when Fred received $800,000 from the purchaser. Fred incurred legal fees of $1100 (Inclusive of GST) and real estate agent's commission of $9,900 (Inclusive of GST) in relation to the sale. Fred purchased the holiday home in March 1987 for $100,000 and paid $2,000in stamp duty on the transfer and $1000 in legal fees. In January 1990, Fred engaged a builder to build a garage on the property for $20,000,

Calculate Fred's net capital gain for the current year. Assume he also has a net capital loss from last year of $10,000 arising from the sale of shares.

Would your answer be different if the loss arose from the sale of an antique vase? (10 marks, max. 1000 words).

Case study 2: Fringe Benefits Tax

Periwinkle Pty Ltd (Periwinkle) is a bathtub manufacturer which sells bathtubs directly to the public. On 1 May 2015, Periwinkle provided one of its employees, Emma, with a car as Emma does a lot of travelling for work purposes. However, Emma's usage of the car is not restricted to work only. Periwinkle purchased the car on that date for $33,000 (including GST).

For the period 1 May 2015 to 31 March 2016, Emma travelled 10,000 kilometres in the car and incurred expenses of $550 (including GST) on minor repairs that have been reimbursed by Periwinkle. The car was not used for 10 days when Emma was interstate and the car was parked at the airport and for another five days when the car was scheduled for annual repairs.

On 1 September 2015, Periwinkle provided Emma with a loan of $500,000 at an interest rate of 4.45%. Emma used $450,000 of the loan to purchase a holiday home and lent the remaining $50,000 to her husband (interest free) to purchase shares in Telstra. Interest on a loan to purchase private assets is not deductible while interest on a loan to purchase income-producing assets is deductible.

During the year, Emma purchased a bathtub manufactured by Periwinkle for $1,300. The bathtub only cost Periwinkle $700 to manufacture and is sold to the general public for $2,600.

(a) Advise Periwinkle of its FBT consequences arising out of the above information, including calculation of any FBT liability, for the year ending 31 March 2016. You may assume that Periwinkle would be entitled to input tax credits in relation to any GST- inclusive acquisitions.

(b) How would your answer to (a) differ if Emma used the $50,000 to purchase the shares herself, instead of lending it to her husband?

Verified Expert

The paper is about Taxation system of Australia. The Capital Gain Taxation in Australia. Which Events attracts capital Gain Tax or not. The paper talks about Capital gain taxation with setoff and carry forward implication. The paper also deal with fringe benefits tax in Australia with implication on Employers and Employees. The paper has been prepared in Microsoft office words document

Reference no: EM131187476

Questions Cloud

Ethical stand regarding a business decision : How can and employee take an ethical stand regarding a business decision when his or her superior already has taken a different position?
Explain some of the tips on assessing job candidates : Explain some of the tips on assessing job candidates. What are five additional tips that you would add? Explain, in detail, why you would add each additional tip.
History of a country manifests : Analyze the effect that events, conflicts, or immigration patterns have had on religious practices, women and minorities in a given country or region. Analyze how the history of a country manifests itself in its culture
Discuss telemarketing : Discuss telemarketing. - Should marketers be prohibited from using the telephone to solicit prospective customers? Why or why not?
Calculate freds net capital gain for the current year : HI6028 Taxation - Theory, Practice and Law - Calculate Freds net capital gain for the current year. Assume he also has a net capital loss from last year of $10,000 arising from the sale of shares.
How can a caregiver foster secure attachment : What behaviors in children are associated with being insecurely attached: avoidant, disorganized, and resistant? What are the short- and long-term effects of secure attachment?
Identify the key points you want to highlight : Your presentation Should: Identify the key points you want to highlight. Contain a minimum of three slides in the body of the presentation
Analyze the requirements necessary to allow for proper os : Analyze the requirements necessary to allow for proper operating system and application patch management and describe a solution that would be effective.
Propose the conflict management techniques : Propose the conflict management techniques that you believe would be most effective to achieve the desired outcome(s) of your recommendation.

Reviews

Write a Review

 

Taxation Questions & Answers

  What effect does a decrease in income taxes payable

What effect does a decrease in income taxes payable for the period have on cash generated from operating activities? Does it matter whether the direct or the indirect method is used?

  Federal income taxation of corporations and shareholders

Realty Corporation sells the building, subject to the mortgage, to Barbara in the current year for $600,000 in cash - Federal Income Taxation of Corporations and Shareholders

  This deferred tax asset differ under u.s. gaap and ifrs

If a company believes that it is more likely than not to have future taxable income

  Discuss whether peter would be entitled to any deductions

Discuss whether Peter would be entitled to any deductions in respect of the interest expenditure incurred from 1 January 2012 to 30 June 2012 for the 2011/2012 income year.

  How much income will anne recognize over the term of annuity

How much of the first $20,000 payment should Anne include in gross income? How much income will Anne recognize over the term of the annuity?

  What is waters current e and p for this year

Taxable income includes a deduction for $40,000 of depreciation that exceeds the depreciation allowed for E&P purposes.Assume a 34% corporate tax rate. What is Water's current E&P for this year?

  Street numurkah

Julie Smith commenced a mixed business/sub-newsagency called ALLNews at 45 Orr Street Numurkah on 1st July 2012. She makes an appointment with you to prepare her 2013 income tax return

  Tax liability calculation

Tax Liability Calculation (LO. 1, 2, 3, 4, 5, 6, 8)

  Corporate tax return problemrequiredcomplete blue catering

corporate tax return problemrequiredcomplete blue catering service inc.s bcs 2011 form 1120 schedule d and schedule g

  The depreciation expense during the current year

Turnip Company purchased an asset at a cost of $10,000 with a ten year life during the current year. The company uses differing depreciation methods for financial reporting and income tax purposes.

  You are a cpa and a tax senior

You are a CPA and a tax senior at Roll Accounting Inc. (RAI), an accounting professional corporation in Canada. It is now March 31, 2014 and you have just finished meeting with Mike Dee, a partner at RAI. Mike has some tax issues that he wants you to..

  Determine the marginal tax rate

Determine the marginal tax rate and the effective tax rate for each of the C corporations and describe why marginal tax rate for a C corporation can exceed 35%, but effective tax rate cannot.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd