INCOME TAXATION
TOPIC- TUTORIAL EXERCISES - CGT
1. Which of the following are assets for CGT purposes?
i) Earth moving equipment held for sale by a dealer but which, from time to time, is let out for hire;
ii) A villa in Spain owned by an Australian resident;
iii) A bungalow in Queensland, owned by a non-resident;
iv) A suite of antique furniture consisting of dining table ($2,000), six chairs ($490 each), dresser ($4,500) and hall stand ($1,500);
v) A motor cycle used for private purposes;
vi) A motor vehicle supplied to an employee as a car benefit for FBT purposes;
vii) Shares and securities held by a bank
viii) A vintage Rolls Royce valued at $85,000.
2. On 31 March 2008, Steve received a guitar as a birthday present from his friend, Jimmy, a musical instrument retailer who purchased the guitar for $2,000. The guitar's retail value is $3,000.
(i) Advise both parties of the capital gains tax consequences of the gift.
(ii) Suppose that in June 2008, Steve pawned the instrument at a pawn broker's shop for $1,500. What capital gains consequences follow?
3. What different tax consequences follow on the sale of an ordinary asset, a personal- use asset and a collectable? [Former exam question (part)]
4.
i) What are the CGT consequences when no consideration is received upon the disposal of a CGT asset?
ii) What happens if consideration promised is subsequently not received?
iii) Why would gifts commonly not produce a capital gain/loss?
5.
(a) Jo purchased a rental property on 4 July 2009 and immediately rented it out. In the year 2009/10 she incurred the following expenses. What is the cost base of the asset?
|
Purchase price
|
450,000
|
|
Stamp duty
|
15,750
|
|
Legal fees to transfer title
|
1,700
|
|
Mortgage interest - 4/7/08 to 30/6/09
|
24,000
|
|
Borrowing expenses
|
2,700
|
|
Advertising for a tenant
|
500
|
|
Extension to kitchen
|
25,000
|
Council rates
|
1,800 |
(b) Elle purchased and sold within the past 12 months [ie, during 2010/11] the following assets:
|
Item
|
Purchase price
|
Sale price
|
|
Diamond ring (private use only)
|
$ 2,870
|
$ 3,920
|
|
Set of golf clubs (private use only)
|
$10,300
|
$10,000
|
|
Trading stock
|
$54,000
|
$68,000
|
|
Depreciating assets (no private use)
|
$14,600
|
$17,500
|
|
Antique vase (private use only)
|
$ 2,890
|
$ 4,200
|
Elle has carry forward capital losses on collectables from last year of $2,000. What is Elle's net capital gain or loss for 2010/11?