Income Tax Framework II - Question 3

(a) As per the Capital gains Rules of the Australian Taxation Office, shares are CGT assets and capital gain tax shall apply on the gain made on the sale of these shares. As the shares were held for more than 12 months and were acquired before 21 September 1999, the indexation rules will apply here.

Sale Consideration


$ 15,000

Less: brokerage fees


$ 1,000

Ne Sales consideration


$ 14,000

Less: Cost base


$ 20,747

Net Capital loss



(b) As per the Capital gains Rules of the Australian Taxation Office, all assets acquired before 21st September 1985 are exempt from CGT. Since, these shares in table Ltd were acquired before this date, CGT will not apply . Hence, the capital gains made here will be exempt from CGT.

(c ) As the purchase price of collectible is more than $ 500, CGT shall apply here

Sale consideration

$ 10,000.00

Less: base

$ 600.00

Capital Gain

$ 9,400.00

Less: b/f capital Loss

$ 1,000.00

Capital Gain after offsetting prior years losses

$ 8,400.00

Less: 50% discount

$ 4,200.00

Net Capital Gain

$ 4,200.00

(d) As per CGT rules, personal assets purchased for a price less than $ 10000 are expemt from CGT. In this case, Home theatre is a personal asset and was purchased for $ 8000, hence no CGT shall apply here.

Income Tax Framework II - Question 4

a) Fines are not deductible as per provisions of ITAA 1997.

b) As per provisions of ITAA 1997, expenses incurred in relation to maintaining residential rental property as not deductible. Hence, these travel expenses will not be deductible.

c) This is an expense of revenue nature and can be claimed as deduction as repair expense.

(d) A deduction for interest charged by the ATO on late payment of income taxes can be claimed under “cost of managing tax affairs”.

(e) Only the expenses incurred in relation to registration fee for conference shall be available as deduction under self-education expanses.

(f) No deduction shall be available for books and stationary as it does not lead to improvement in skills or qualifications of the taxpayer.

(g) All the electricity, interest, cleaning expenses can be claimed as deduction under home office expenses.

(h) He can claim deduction for $ 3000 legal fees as it was actually paid by not however no deduction would be available for $ 5000 in relation to bad debts written off as these not actual bad debts.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Taxation Law Assignment Help

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