Introduction: In Australia, Income Tax Assessment Act, 1997 is the main legislation governing provisions related to matters of income tax including capital gain tax. The concept of capital gain tax in Australia was introduced in the year 1985. Provisions of capital gain tax applies on sale of assets subsequent to the introduction of capital gain tax in 1985. The provisions of Income Tax Assessment Act 1997 (ITAA 1997), taxation rules (TR...Read More >>
Answer: The given scenario deals with a client who has liquidated certain assets during the year. It is noted that these transactions are not business transactions which implies that the client does not have a business which deals with selling and purchasing of assets such as land, painting, shares, and violin. This is crucial information which indirectly hints that the proceeds from the sale of the given assets would not have a revenue elem...Read More >>
Answer: 1. Issue The issue is to consult the taxpayer about her taxation implications for year 2017/18 on the account of received capital proceeds from the disposal of the capital assets belonging to taxpayer. Law When the taxpayer does not carry a business course of action of trading the assets for deriving the assessable income, then the disposal of assets would be considered as capital receipts not revenue receipts (Barkoczy, 2017). The...Read More >>
Answer: 1. Issue The major issue is to tender advice with regards to the potential tax implications of the assets that have been disposed by the client. In regards to consulting the client on the tax treatment, the various given information need to be critically analysed in the wake of applicable legislations coupled with taxation rulings. Law Revenue v Capital Proceeds The proceeds from sale of an item could be revenue or capital based on...Read More >>
Answer: Introduction The fundamental problem to this instance is linked to estimate the net sum of earnings that is grossed by the partners all over the year of assessment and to conclude the dispersal of incomes amongst the partners. Rule: “Division 5 of the ITAA 1936” commence with the “section 90”, that explains partnership is not the separate legal company within the purview of genera law and do not pay taxe...Read More >>
Answers: 1. On the basis of the framework of income tax assessment act 97 at have been observed that the capital gains tax can be asserted on the disposal as a whole. Changes that have been incurred by the organization in between the cost base and proceeds that have been ordered by the organization from the assets are used to attract capital gains. This will help the organization to determine a path for earning capital gains or losses. Howeve...Read More >>
Answer: Requirement 1: i. The difference between the cash basis and accrual method of accounting is dependent upon the sales and purchase that is recorded the accounting books. Under the cash method of accounting the revenues and the expenditure are identified based on the situations when there is a change of hands (Bushman et al., 2016). While in accrual accounting method the revenues are identified as and when it is earned. A taxpayer...Read More >>
Answer: Question 1 The situation presents involving offering tax advice to the client considering that there are certain assets which have been disposed during the tax year 2017/2018. An important aspect to note is that that given assets which are disposed does not constitute trading stock for the client since these transactions are not part of normal business activity. As a result, the potential implications of ordinary income can be r...Read More >>
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