Reference no: EM13342878

Taxation Law and Practice 1.BAP 31 and/orBAP 331

Question:

Kitty, aged 36, lived in Melbourne all her life. She decided to travel to Sydney on 1 May 2014 to begin a new job as flight attendant with an international airline. In assisting her move to Sydney,Kitty sold some of her assets as follows:

a.Car. Kitty expects to use buses and trains in Sydney so she sold her Toyota on 20 April 2014for $37,000. She bought the Toyotaon 2 October 2009 for $57,000.

b.Rental property.Kitty bought a rental property on 19 April 1986 for $75,000. She incurred $1300 of legal expenses on the purchase. She has always rented out the property and sold it via a contract signed on 17April, 2014. The sale price was $100,000and the costs incurred in selling the property were the agents selling fees of $750 and legal fees of $1,500. Settlement on the property was completed on 16 June, 2014

c.Vacant block of land.Kitty signed an unconditional contract to sell a vacant block of land on 18 May2014 for $95,000. The settlement took place on10 July, 2014. Kitty received the landvalued at $55,000on the death of her Uncle Edmund, who died on 10 March 1995.Uncle Edmundbought the land on 9June1992 for $40,000. Costs incurred by Kitty in selling the land were real estate agent fees of $575 and legal fees of $850.

d.Goldring. Kitty received agoldring from an admirer,Bryce, on 10May, 1988and sold it for $4,000 on 3 June 2014.Brycebought the ring on 7 May, 1988for $1700. (Assume that the market value was the samefrom 7- 10May, 1988.

e.Home. Kitty sold her homein Melbourne that she was living infor $1,375,000 on 10 December 2013. She bought it on 17August, 1985 for $285,000.The costs incurred in selling her home were $2000.

f.Modern furniture.Kitty sold all her furniture on 22April, 2014for $15,000. Originally, she bought the furniture for $26,500 on 17 October, 1991.

g.Boat.Kitty sold her boat on 5 March, 2014 for $18,000. She originally bought the boat for $11,000 on 16 April, 2013.

Required:

Advise Kitty of the capital gains tax implications of the above transactions for the year ended 30 June 2014. Show ALL calculations including Kitty's net capital gain or loss, citing relevant sections of the ITAA, with explanations, in addition to citing relevant case law.