Question

Simon is an Australian resident taxpayer who has undertaken the following transactions during the tax year ending 30 June 2019.

Item number	Transaction	Particulars
1	Sold car	Purchased on 1 March 2010 for $30,000. Sold on 20 April 2019 for $12,000
2	Sold painting	Purchased on 1 January 2008 for $600. Sold on 3 February 2019 for $6,000
3	Shares sold in C Pty Ltd	Purchased on 14 April 2013 for $10,000 and sold on 15 May 2019 for $20,000.
4	Sold home	Purchased on 1 July 2007 for $200,000. Sold on 30 June 2019 for $500,000 (This is the only dwelling that the taxpayer owned. The taxpayer had lived in this dwelling the whole time since purchase.)
5	Block of land	Purchased on 18 October 2005 for $180,000. Sold on 7 December 2018 for $250,000
6	Sold shares in A Pty Ltd	Purchased on 11 October 2017 for $8,000 and sold on 1 August 2018 for $14,000.
7	Sold shares in B Pty Ltd	Purchased on 9 December 2016 for $12,000 and sold on 1 August 2018 for $9,000.

In all calculations, you should assume that Martin is wishing to minimise his taxable income.

Required:

Calculate the capital gain or capital loss in respect of each transaction and the overall net capital gain, if any, for the year ended 30 June 2019. according to Australian taxation law

Answer 1

1. Cars and small vehicles are exempt from capital gain tax. Hence, there won't be any capital gain/ loss on the sale of motor car.

Capital Gain - 0

2. Since, painting was acquired for more than $500, the capital gain is taxable. However, since it is held for more than 1 year, 50% discount would apply.

Capital Gain - 50% of (6000-600) = $2,700

3.Capital Gain on sale of shares is taxable. However, 50% discount would apply:

Capital Gain - 50% of (20000-10000) = $5,000

4. Since the house is the sole dwelling unit for Simon, there would be no capital gain on sale of house.

Capital Gain - 0

5. Sale of block of land is taxable as capital gain. However, 50% discount would apply since holding period exceeds 1 year.

Capital Gain - 50% of (250,000 - 180,000) = $35,000

6. Capital Gains on sale of B Pty Ltd's Shares. Holding period is less than 1 year, hence no discount would apply.

Capital Gain - (14000 - 8000) = $6000

7. There is a capital loss on sale of C Pty Ltd's shares. Since, holding period is more than 1 year, the 50% discount would apply

Capital Loss - 50% of (9000-12000) = ($1,500)

Net capital gains for Simon - $47,200