HI6028 Taxation Sample
Note: This sample is of T1 2019, For ordering fresh assignment for HI6028 Taxation Theory, practice and Law for T2 2019…..
TAXATION THEORY, PRACTICE & LAW
Table of contents
Question 1. 3
Question 2. 5
Question 3. 7
The capital gain analysis is explained in this study through respective questions. Apart from this, personal income is stated along with the loan statement description enticed within family members. The reflection on the three questions provided are through the respective solution analysed through theories, practice & law.
Capital gains along with deals in transaction are discussed in this section. Apart from transaction details and capital gains, the taxation scenario, and aspects of taxation affecting income is analysed thoroughly. There are responsive assessment discussing on how taxation associates with the returns. The case study reflects on establishing how Helen wants to fund her business as a fashion designer. This funding would be depended on selling assets and the capital derived is through selling of certain pieces of commodities.
- Historical Sculptures under Helen’s acquisition
- Paintings that are antique and Helen possesses them
- Antique set of jewelry pieces
- Paintings, pictures and other form of art
It is important to comprehend that the principles are in like manner in association with the estimation of capital gain where the capital tax is figured under the assigned law and the guideline is expressed by the Australian government and the constitution.
- Amount of purchase along with date of purchase helps to analyze the capital gain. In this case, the purchasing date is stated as, February, 1985 = $ 4000. Date and amount of sale in December 2018 = $ 12000. The indexation is applied on transaction is how this entire application is explained. The eligibility of the capital tax also reflects through the date and terms of transaction. The term and date has been applicable after enactment of 20th September 1985 and after its existence details of capital tax and its effect on return has to be calculated. The date also becomes important as in, the law clearly states that commodities purchased after or on 16th of December 1995 will not be under the liability of Capital Tax. These assets were bought on February 1985. Thus, the prices of these commodities are liable to Capital Tax (ATO, 2019).
The calculation method for this amount is through indexation method.
Assets sold at Value = $12000
Acquisition Cost = $ 4000 * 114.1 / 68.7 = $ 6643
Capital Gain = $ 5357
- Capital Gain or loss is estimated through analysis of amount of purchase and date. The date of purchase mentions to be December 1993 = $ 5500. Date of sales and amount noted on this sales includes, January 2018 = $6000. Thus, the transaction includes application of indexation that is further assumed to affect the return. Goods bought after or on February 1985 are sold with capital tax as the amount is calculated through indexation method. Calculation is as follows:
Sold Value Assets = $ 6000
Acquisition Cost = $ 5500 * 112.6 / 68.7 = 9014
Loss of Capital = $ 3014
The owner is acquiring loss and receiving the collectables with a compensation on the account along with collectable gain.
- The capital gain or loss is estimated through purchased amount and date of purchase that is October 1987 =$13000. On contrary, the date of sale and amount is March 2018 = $ 14000. Being aware with the date and amount has helped to analyse the significance of indexation in transaction. These also allow to reflect on the liability of capital tax in the commodities. As mentioned in the law, the capital tax is not liable to all products purchased after or on 16th of December 1995. However, since all commodities mentioned in the case study reflects its purchase date to be February 1985, the goods are liable to capital tax. This amount is calculated through the indexation method and follows with the given computation:
Assets sold at the Value of = $ 14000
Acquisition Cost = $ 13000 * 112.6 / 68.7 = $ 21307
Loss of Capital = $ 7307
Again, in this case, owner has received a loss of capital by $ 7307, this loss ah been bored due to the implementation of capital tax. However, the loss is compensating through the clause of collectables and it can be compensated on account of collectable gains.
- As discussed in the previous section, the loss is estimated when the capital tax is implemented on the selling cost. Again, this could be explained well through evaluation of how capital tax is implemented on purchased products. For this, there is a requirement of knowing the date of purchase and amount. The respective in this case includes,March 1987 = $470 and July 2018 = $5000. In this case, the indexation is likely to get explained after application in the transaction. The date of significance is essential and defined through capital tax section. It also noted whether the capital tax is eligible or not. Importance of tax law coming into existence after 20th September 1985, describes its computation process. In fact, it discusses the difference between the collectables and assets. It has been stated that the commodities purchased after 16th of December 1995 is not subjected to capital law. While, on the other hand, the case depicts that the products were bought in 1985, February. Thus, during its selling, the amount would be calculated after inclusion of capital tax. This is amounted through indexation method.
Sold Value of assets = $ 5000
Acquisition cost = $ 470 * 114.1 / 68.7 = $ 776
Gain of capital = $ 4224
The calculation forwards by:
Jewelry price that are antique = $ – 7307
Antique painting = $ 5357
Antique Sculptures = $ – 3014
Picture = $ 4224
Hence, Capital Loss acquired by Helen after selling of the assets mentioned = $ 740
Question two discusses on the following details:
Writing book that contains economic principles = $ 13 000
Principles of Economics’ has been copyrighted to be named as The Eco Books ltd. = $ 13 400
Selling of Manuscript of Eco Books Ltd Library = $ 4350
Economic books’ interview from the manuscripts = $ 3200
To understand that it is fundamental to have a sensible idea in regards to the arrangement which being elucidating the possibility of Personal administration pay or the individual exertion in essential and in clear language it infers that the compensation which is earned only. According to the Australian evaluation law which unquestionably express that if in overabundance of half of the individual pay has been arrived from the essentially three major point of view which being the work solitary bent, explicit individual capacities, further the capacities will provoke help with managing the learning (ATO, 2019).Further, such income should be based through some business further, the test outcomes manage guaranteeing that all the three components are met which being:
Paid to deliver a particular outcome
Required to give own tools and equipment
Required to fix wrongs at own cost
All the provided pay earned are on record of Barbara’s composing a book on financial standards. The Eco Books Ltd. has been analysed for $13400 that also qualifies specific three condition providing outsource to a particular outcome that composes all financial details. Specifying all significant features, Barbara has got all concerns clarified before composing the book. In fact, this composition has been made after utilization of Barbara’s own tools as per the ability and mindful activities. Presenting a specific identification, Barbara has received almost all acquired details lining up with an able decision. In fact, all cost during the preparation of launching or writing the book has been sponsored by Barbara himself. All three precise conditions have been met and thereby there has been an acquisition of discharged salary allowing to precisely be specific to manage the prospectus during the book presentation. The Manuscript of Eco Books Ltd. Library is counted as other income that is $ 4350.
Original copies meet for the financial books: – $ 3200 are likewise considered as close to home discharge salary. Regardless, if such pay was gotten in a condition where Barbara had created the book by uprightness of financial norms before considering or consenting to go into a sell contract with the Eco Book ltd would not be considered as a situation where such receipts are considered as an individual discharge (ATO, 2019). Nonetheless, the compensation jumped on record with the first duplicates and meeting are after the understanding is made and thusly, will be verifiably be considered as an individual release. In agreement to Braithwaite, (2017), the reason being that the past does not fulfill all the three conditions, regardless, the last certainly fulfills condition for all the three conditions.
Calculation is as follows with defining of calculation:
Patrick paid $ 52000 as an advance to his child in wording with the capital interest in the business
Reimbursement understanding was done in a residency of five years
Reimbursement understanding sum equivalents to $ 58000
Conditions: No formal understanding was made nor the security stores was considered and no intrigue provision.
Time of Real Repayment or credit got back = Two years
Amount of Real Repayment or credit got back = $ 52000
Actual Repayment and Loan Received and includinginterest = 5 % of $ 52000 = $ 2600
The information placed here lays a following impact on Loan provider or Pratick’s income statement in the provided manner.
There has been an unconsiderable observation made about the essential concern of money that has been received by David not through any gift but through significant outflow of cash. David makes this reflection of cash all from his salary that has been earned after service to any particular sector.The conditional proof obviously says that the reimbursement is done on record with check, in this manner, in the annual assessment form it must be considered as a loan. In consideration to the Australian Taxation law, the reflection of exchange made between David and Patrick should be highlighted through legal papers. These legal papers should include reflected government forms depicting a concerned analysis of all transaction details.
As an issue of the reality Patrick calculation which reflect such exchanges in a bifurcation of two way, one being in the credit calendar of the underlying sum which being the vital sum or $ 52000. Income in the compensation clarification as a segment of interest got by uprightness of giving credit paying little respect to how the no understanding is made. Regardless of the way that the development was given to the relative for this circumstance being the kid. On the other hand, it is essential to fathom that the credit requires a dimension critical to be paid and the base rate is to be paid at 5% credit (ASIC, 2019).
Further, such intrigue is referenced as a lawful salary while documenting the hotel return. In this way, the child pays an extra measure of five percent which being no more under the legitimate condition when no loan cost is guaranteed. The extra credit pay got for $ 2600 which from the above elucidation is a certified assessable pay and ought to be consider while following through on the administrative commitment on the compensation. In reflection to the cost that has to be paid on such compensation ought to be connected with real time factors. This is including the development provider which specifically includes an individual, trust or any association firm of business. In clear words charge rate qualified will be relative to the obligation rate considered on such order of the compensation social affairs. Consequently, precisely the entirety given to David is considered as a development in spite of the way that it isn’t in comprehension, and the other being that the interest pay is to be referenced and which must be legally taxable.
paper gives an extraordinary in sight about the Australian tax assessment
framework and how different wording are translated and reflected in a specific
set way and a recommended procedure. The three questions place a definite
identification of the different income calculation. It has been identified that
almost all necessary returns are being calculated through different context of
ASIC, 2019. Loans involving family & friends, ASIC. Available At: https://www.moneysmart.gov.au/borrowing-and-credit/borrowing-basics/loans-involving-family-and-friends
ATO, 2019, IT 2639, ATO.Available At: Punjabassignmenthelp.com
ATO, 2019, Working out your capital gain or loss, ATO. Available At: https://www.ato.gov.au/General/Capital-gains-tax/Working-out-your-capital-gain-or-loss/Working-out-your-capital-gain/The-indexation-method-of-calculating-your-capital-gain/
Braithwaite, V., (2017). Taxing democracy: Understanding tax avoidance and evasion. Ed. 5th Abingdon: Routledge.