Reference no: EM131058315

The following transaction are relevant to Michael Kelvin. Advise Michael as to his potential net taxable capital gain that may arise for him for the year ended 30 June 2015 as a result of these transactions.

Please make full reference to income tax legislation and specifying your specific reasons for each component of your answer.

1. On 1st August 2014, Michael sold his flat at St Kilda for $380,000. He had purchased the flat in November 2007 for $200,000 and lived there at all times until 1 January 2012 when he and his family moved to Sydney. While he lived in Sydney, the flat at St Kilda was rented out. Michael did not acquire a new residence before he sold the flat.

2. On 20th September 2014, Michael sold a painting for $4,000. The painting was acquired in March 2011 for $5,000.

3. Michael also bought a coin collection in 2010 for $400 and sold it to the same buyer that bought the painting for $2000 on 20 September 2014.

4. On 15th March 2005, Michael sold a ring for $2,000. He had bought the ring in 1990 for $800 as a present for his former wife who left it to him after their divorce.

5. Michael is only 35 years old but he had been carrying on a small goods business for as a sole trader for 15 years. The business has had an annual turnover of $5,000,000 in 2014 year. Michael wishes to travel extensively over the next 18 months and sold his business on 8 January 2015 to a former business partner. The only CGT asset in the business was goodwill which had been generated in the business since inception. He sold the business for $500,000. When Michael returns after his travels he intends to purchase another business again.

6. In order to have some cash for his travels Michael also sold his luxury boat for $100,000 on 12 January 2015. He original bought it for $120,000 in 2010.

7. Michael also owned a warehouse which he acquired in 2008 for $120,000. Unfortunately just before he left on his travels the warehouse had burnt down due to an electrical fault. Michael expects that the insurance company will pay him compensation in the amount of $100,000 as the insured value.