capital gain
Calculate Melinda’s net Capital Gain (or net capital Loss) and tax payable for 2011-2012 income year.
Key question that has to be determined is whether a CGT event occurred in reference to a CGT asset, if so has this resulted in a gain or loss or is the item exempt under s100-30
Under Div 118 ITAA 1997 the following items are exempt under the following clauses
Fridge purchased for $900 in 2006
- S108-20(2) if acquired as a personal asset – intent not to be kept for income producing purposes. Cost base is below $10k and therefore disregarded even though capital loss has occurred.
Car purchased for $7,000 in 1998
Division 118 s118.5– is exempt asset regardless of capital gain or loss as it’s a depreciating asset.
Collectable assets
Sculpture is collectable under s108-10(2) acquired for$1000 which is above the $500 threshold cannot be exempt, acquired on 1/06/07 greater than 12 months therefore classifies as discountable.
Capital proceeds $3500
Less Cost base $1000
Gain before discount $2500
Antique furniture also classifies as a collectable, and was held for more than 12months and therefore is discountable
Capital proceeds $700
Less cost base $1200
Loss $500
Land*
Initial option payment is a CGT event D2 event
Capital proceeds $5000 –Less legal fees 1000
Capital gain of $4000 non discountable
Capital gain is made in previous year – not relevant to the current year’s calculation.
-Not Discountable.
Sale of land
Capital is $260,000(sale price) + 5000 second option price = $265,000
Less ($80,000(cost base: Acquisition Costs – s.110-25(2)) +$70,000(apartment: Enhancement, Preservation, Installation and Moving Costs –s.110-25(5))
+$10,000(trees: Enhancement, Preservation, Installation and Moving Costs –s.110-25(5)) +1000(option cost: Incidental Costs - s.110-25(3))) =$161,000
Capital gain before discount = $104,000 – discountable
Shares
Share A - $40,000 gain - discountable
Share B - $20,000 gain: non-discountable (Not
Key question that has to be determined is whether a CGT event occurred in reference to a CGT asset, if so has this resulted in a gain or loss or is the item exempt under s100-30
Under Div 118 ITAA 1997 the following items are exempt under the following clauses
Fridge purchased for $900 in 2006
- S108-20(2) if acquired as a personal asset – intent not to be kept for income producing purposes. Cost base is below $10k and therefore disregarded even though capital loss has occurred.
Car purchased for $7,000 in 1998
Division 118 s118.5– is exempt asset regardless of capital gain or loss as it’s a depreciating asset.
Collectable assets
Sculpture is collectable under s108-10(2) acquired for$1000 which is above the $500 threshold cannot be exempt, acquired on 1/06/07 greater than 12 months therefore classifies as discountable.
Capital proceeds $3500
Less Cost base $1000
Gain before discount $2500
Antique furniture also classifies as a collectable, and was held for more than 12months and therefore is discountable
Capital proceeds $700
Less cost base $1200
Loss $500
Land*
Initial option payment is a CGT event D2 event
Capital proceeds $5000 –Less legal fees 1000
Capital gain of $4000 non discountable
Capital gain is made in previous year – not relevant to the current year’s calculation.
-Not Discountable.
Sale of land
Capital is $260,000(sale price) + 5000 second option price = $265,000
Less ($80,000(cost base: Acquisition Costs – s.110-25(2)) +$70,000(apartment: Enhancement, Preservation, Installation and Moving Costs –s.110-25(5))
+$10,000(trees: Enhancement, Preservation, Installation and Moving Costs –s.110-25(5)) +1000(option cost: Incidental Costs - s.110-25(3))) =$161,000
Capital gain before discount = $104,000 – discountable
Shares
Share A - $40,000 gain - discountable
Share B - $20,000 gain: non-discountable (Not