# Flint is a medical doctor and a scientist. He works at a local hospital in the mornings,

###### Jill is employed full-time as an accountant at a top tier accounting firm. In the 2018/19 year of income, she receives a salary of \$100,000 from working at the accounting firm.
November 18, 2020
###### Lucy Lee is a 26-year-old accountant working in private practice in Auckland. She was born in Singapore but emigrated to New Zealand when she was
November 18, 2020

Calculate cost base for Capital Gains Tax purposes and advise Damian of his CGT liability for the period 30 June 2017.

### Question 3

On 3 July 1993 Dominic bought an investment property.  The property cost \$650,000.  He consulted his accountant regarding the purchase and this advice cost him \$1,500.

In addition, he paid stamp duty of \$18,000.  David used a loan to acquire the property and paid \$2,600 stamp duty on the loan.

The property was sold in June 2019 for \$4,500,000.  Costs associated with the sale included commission of \$135,000 paid to the real estate agent who sold the property and advertising of \$6,000.  Both expenses were paid in June 2019.  In November 2001 Dominic’s next-door neighbour, Grumpy, disputed the placement of the fence and considered that some of the land on Dominic’s side of the fence was in fact his land. It cost Dominic \$84,000 in various fees and costs to prove that the fence was correctly placed.  Grumpy did not pay any of Dominic’s costs. In a separate incident, Dominic incurred a fine of \$29,000 imposed by the local council for illegally building a swimming pool in his backyard.  Dominic also incurred the following expenses in relation to the above property:

Interest on the loan over the ownership period totalled \$450,000,

Insurance costs over the period of ownership costing \$39,000,

Roof on the second storey was repaired in 2010 at a cost of \$45,000,

Rates and land tax of \$116,000 were paid during ownership of the property,

Interest of \$22,000 was paid since October 2016 when David obtained a personal loan to completely modernise the kitchen and bathrooms at a cost of \$63,000.

### Required:

Calculate Dominic’s cost base for Capital Gains Tax purposes and advise his CGT liability for the period 30 June 2019

Question 4

In Year 1, Alpha Pty Ltd has \$800,000 of assessable income and \$1,100,000 of deductions. In Year 2, Alpha has \$500,000 of exempt income, \$300,000 of assessable income and \$150,000 of deductions. In Year 3, Alpha has \$800,000 of assessable income, \$560,000 of exempt income and \$900,000 of deductions.

Advise Beta of its taxable income (or loss) in each year.

### Question 5

Amy is a client of yours. To fund her career as an artist Amy sold some of her art collection by other artists. It consisted of:

(a) An antique ceramic bowl purchased in February 1995 for \$1,000. She sold the bowl on 31 November 2019 for \$22,000.

(b) A sculpture purchased in December 1985 for \$5,500. She sold the sculpture on 1 January 2018 for \$7,000.

(c) A bronze ﬁgure purchased in October 2007 for \$11,000. She sold the bronze ﬁgure on 20 March 2015 for \$18,000.

(d) A painting purchased in March 1984 for \$470. She sold the painting on 1 July 2010 for \$8,000.

(e) Consider the CGT consequences of the above transactions.

### Question 6

Are the following CGT assets, collectables or personal use assets:

(a) An engagement ring which cost \$150,000;

(b) A second-hand car purchased for \$9,000;

(c) Shares in ANZ worth \$20,000;