Question

NOTE: NEED PLAGIARISM FREE ANSWER

Taryn would like to open a new business as an interior designer, to funds her ambition she sold some of the following assets:

1. Antique Painting that was given to Taryn by her father 5 years ago. Taryn’s father bought it on 20 August 1984 for $2,500. Taryn sold it on 1’st June 2020 for $25,000

2. Taryn sold her car (Toyota Corolla) for the amount of $12,000 on 20’th May 2020, she bought on 1’st January 2015 for the amount of $20,000

3. Taryn sold her Harry Potter’s collection for the amount of $1,500 on 4’th January 2020, she bought it second hand on 10’th October 2018 for $350.

4. Taryn sold her gold necklace for $2,000 on 20’th March 2020, she bought it for $1,200 on 8’th August 2018

5. Taryn sold a sculpture for $6,000 on 1 January 2020, she bought it on December 1994 for $1,500

Advise the Capital Gain Tax Consequences for the above transactions, please have a look at the matrix below on how to answer the question

Answer in around 1000 words (acceptable to be 10% above or below this word limit).

QUESTION 2: Capital gain tax consequences Identification of material facts on regard to each case Weighting 2 % Identification and analysis of legal issues / legal question and relevant taxation law for each case. 2 % Thorough application of ITAA 1997 to material facts. 2 % Accurate conclusions are reached from each case. 6 % 3 % Correct information and taxation law have been used and properly cited. A detailed analysis has been performed. QUESTION 2 TOTAL MARKS: 15 %

Answer 1

Te Capital Gains implications for all the different 5 scenarios are listed hereunder in the table along with detailed explanations:

Ref No Scenario Applicability of Capital Gains Reason Antique Painting that was given to Taryn by her father 5 years ago. Taryn's father bought it on 20 August 1984 for $2,500. Taryn sold it on 1'st June 1 2020 for $25,000 Painting is a collectible which is in purview of CGT.If acquired for value less tha $ 500 it will be exempted or if acquired before 20Sep,1985 will be exempted.In this case both the exemption clauses donot apply since Taryn got the painting only 5 years ago and value is not less than $ 500. YES Taryn sold her car (Toyota Corolla) for the amount of $12,000 on 20'th May 2020, she bought on 1'st 2 January 2015 for the amount of $20,000 "Own Car" is exempted.Car in this case qualifies for te definition of a motor vehicle meant to carry leass than 9 passengers and load less than a tonne. NO Taryn sold her Harry Potter's collection for the amount of $1,500 on 4’th January 2020, she bought 3 it second hand on 10'th October 2018 for $350 NO Taryn sold her gold necklace for $2,000 on 20'th March 2020, she bought it for $1,200 on 8'th 4 August 2018 YES The books were acquired for a value less than $ 500 i.e. at a cost of $ 350 hence exempted Jewellery qualifies as a Collectible.Since the necklace was purchased for a value greater than $ 500 it qualifies for Capital Gains This case none of the exemption conditions for collectibles is applicable viz: 1. acquired for less than $ 500 or 2. Acquired before 16 december 1995 for $ 500 or less or 3. acquired interest in asset when value was less than $ 500 Taryn sold a sculpture for $6,000 on 1 January 2020, 5 she bought it on December 1994 for $1,500 YES