Taxation Theory, Practice, And Law
Introduction
Capital gain is considered as the enhance in the capital assets value, which provides this a higher-level worth instead of the purchasing power (Braithwaite, 2017). Capital gain may be long-term or short term as well as should be claimed over income taxes. Additionally, it allows increasing the value of the noncurrent assets, which will give more return value to the buyer after selling in the market place. This task will outline the net capital gain by the client for the assessment year ending on 30th June 2018 will be identified as well as calculated. In addition, Rapid Heat’s fringe benefit liability in two different situations will also be evaluated. Two different situations will be evaluated respectively in this report. However, suggestion will be provided to the Rapid Heat in relation to the methods required for minimising their overall fringe benefits liability.
Question 1
1. Block of vacant land.
On the 30th June of this year, a contract has been signed by the client in order to sell a block of a vacant land for $320000. In the same, she acquired this land for $100000 incurring $20000 in, local council, water, sewerages rates and land taxes during her land’s ownership. Contract states of the sale that deposit of $20000 would be paid during the contract signing with the balance to her is being billed on the 3rd January on the next year, after the registration of the changing ownership.
| Particulars | Amounts |
| Local council taxes | 100000 |
| Price of the vacant land | 21000 |
| The exhaustive cost of the land | 121000 |
| The appropriate cost of the land | 7500 |
| Capital accomplished in the current year | 12,500 |
| Capital earned through the land’s sale | 20,500 |
| The exhaustive amount in the vacant land’s sale | 320,500 |
2. Antique bed
In addition, the client had the tradition of stealing a four-poster Louis XIV bed from her own home in this current year. Value and the value in the market is understood by her in this same year for the insurance purpose was $25500. By giving $3500 on 21st July 1986, she purchased the bed. In addition, there were some modifications or changes were done in the bed that had increased the cost and value to $1500. In this same year, she lodged a claim including her insurance firm looking for recovering her overall loss.
| Particulars | Amount ($) |
| Antique bed’s cost price | 3500 |
| Cost of alteration | 1500 |
| The exhaustive cost price | 5000 |
| The current value of the antique bed | 25000 |
| Indexed cost of the antique bed | 13453.4 |
| Total amount paid through the insurance organization | 11000 |
| An indexed capital loss is | -2453.4 |
| As the asset was sold in the year 2018. Consequently, the CPI rate is | 113 |
| As the asset was purchased in the year 1986. Consequently, the CPI rate is | 42 |
3. Painting
On the 2nd May, 1985, an Australian artist had paid $2000 to acquire a painting that increased in value in the market place after the death of its painter. On the 3rd April of this same year, she sold the painting for $125000. This is possible to understand this in a better manner through analyzing the table properly that is provided below:
| Particulars | Amounts($) |
| Painting’s actual cost price | 2000 |
| Painting’s Index cost price | 5942 |
| Painting’s current price | 125000 |
| CPI rate of the asset during selling on 3rd April 2018 | 112.6 |
| CPI rate of the asset during purchasing | 37.9 |
| Painting’s Indexed gain | 119058 |
Taxation Law
As per the taxation Laws to Australia, a visitor visiting Australia is liable to pay tax. However, there are certain aspects of that are being checked to ensure the fact that the tax liability being imposed is at par the guidelines of Australian taxation laws.
