Calculate cost base for Capital Gains Tax purposes and advise Damian of his CGT liability for the period 30 June 2017.
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.
Calculate Dominic’s cost base for Capital Gains Tax purposes and advise his CGT liability for the period 30 June 2019
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.
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.
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;
(d) Your home;
(e) A painting hung in the foyer of your law ﬁrm;
(f) A holiday house at Port Douglas
Outline your reasons/answers
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