Reference no: EM132313561 , Length: word count : 2000

Assessment task:

In Question 1 there are rules like collectable and personal use assets.

Question 1 no1. helen father bought: Feb 1985 no Capital gain tax
                   no2. helen sold:  pay tax CGT on 500
                   no 3. antique jewelry: collactable post GT
                   NO 4. Helen sold picture:  collactable under 500, disregard

Question 2: it's about assessable income ( back up with case)

question 3:  2 components: father 52000
                                               son 58000
                    effects of assessable income for the father
(case: Federal wharf co, Lomax vs Peter Dixon) this case help to solve the question 3

Question 1

Your client Helen wants to fund her business as a fashion designer, therefore she has sold some of the assets as follows:

1- An antique impressionism painting Helen's father bought in February 1985 for $4,000. Helen sold the painting on 1 December 2018 for $12,000.

2- Helen sold her historical sculpture on 1 January 2018 for $6,000. She has purchased the piece on December 1993 for $5,500.

3- An antique jewellery piece purchased in October 1987 for $14,000. Helen sold the antique jewellery piece on 20 March 2018 for $13,000.

4- Helen sold a picture for $5,000 on 1 July 2018. Her mother purchased the picture in March 1987 for $470.

Advise the Capital Gain Tax consequences of the above transactions.

Question 2

Barbara is an economist researcher and commentator. The Eco Books Ltd offers her $13,000 for writing a book about economics principles. Barbara has never written a book about economics principles, but accepts the offer and writes the economics book called 'Principles of Economics'.

She assigns the book's copyright for $13,400 to The Eco Books Ltd. The book is published and she is paid. She also sells the book's manuscript to the Eco Books Ltd's library for $4,350 plus several interview manuscripts she has collected while writing the economics book for which she receives $3,200.

Discuss each of the above payments to Barbara separately and states if these are income from Barbara's personal exertion. Would your answer differ if Barbara wrote the Principles of Economics' book before signing a contract with The Eco Books Ltd in her spare time and only decided to sell it later?

Support your answer by referring to relevant statutory and case law.

Question 3

Patrick paid $52,000 to his son David to provide some assistance in his newly started business. They agreed that David repay his father $58,000 at the end of five years. Patrick provided this loan to David without any formal agreement or security deposit for the sum lent. Patrick told his son that he need not pay interest. However, David repaid the full amount after two years through a cheque, which was included an additional amount equal to 5% on the amount borrowed.

By referring to relevant statutory and case law, you need to discuss the effect of these arrangement on the assessable income of Patrick.

The individual assignment will assess students on the following learning outcomes:

1. Demonstrate an understanding of the Australian income tax system, the concepts of income and deductions, CGT, FBT, GST general anti-avoidance provisions and income tax administration.

2. Identify and critically analyse taxation issues.

3. Interpret the relevant taxation legislations and case law.

4. Apply taxation principles to real life problems.

Collectables

Capital losses from collectables can only be applied against capital gains from collectables

Capital gains and capital losses are disregarded if collectables acquired for under $500

Personal use assets

Capital losses disregarded

Capital gains disregarded if personal use asset acquired for $10,000 or less.