Calculate jacks minimum net capital gain

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Reference no: EM13500208

Jack Hammer (a sole trader) sold his accountancy business on 30 June 2012. The capital proceeds attributable to the internally generated goodwill are $2,000,000 (the rest of his business assets were matched by compensating liabilities and were sold at their cost base). Jack started the business in 1988 and he now plans to work for the purchaser. Jack's cost base for the goodwill is nil. Jack is 57 years old. Apart from a share portfolio worth $3,500,000, Jack's other assets are a vintage car (worth $100,000) which Jack uses for personal enjoyment, his family home (worth $1,000,000) which has been used exclusively as a home, and his superannuation fund (worth $300,000).

Required

(a) Outline whether Jack passes the maximum net asset value test in s. 152-15. Identify all inclusions and exclusions with brief justification (you must quote specific legislation).

(b) Briefly justify whether Jack can obtain the 15-year exemption in s. 152-105.

(c) Assuming that Jack cannot obtain the 15-year exemption and ignoring the small business rollover concession, calculate Jack's minimum net capital gain on the sale of his business. Do not explain your answer. Do not quote legislation.

 

Reference no: EM13500208

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