Seminar 7.docx - 3106AFE Revenue Law Trimester 2 2017...

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3106AFE Revenue Law Trimester 2, 2017 Seminar 7 Question 1 In relation to CGT, which of the following statements are correct? In relation to each statement explain your answer citing the relevant law. (a) When disposal of property (CGT event A1) is by gift, the capital proceeds are taken to be nil. The statement is incorrect. According to s116-30 the market value of the gift at time it was given will be taken as the capital proceeds. (b) When an asset is sold with capital proceeds received in instalments, the capital gain will be apportioned between the years when the capital proceeds will be received. EXAMPLE – if you sell a house (worth $500,000) for $500,000 payable in five annual instalments of $100,000 … … will there be five capital gains (or losses) calculated where the capital proceeds are $100,000 each year OR one single capital gain (or loss) in Year 1? Year 1 Capital proceeds $100,000 OR Year 1 Capital proceeds $500,000 Year 2 Capital proceeds $100,000 Year 3 Capital proceeds $100,000 Year 4 Capital proceeds $100,000 Year 5 Capital proceeds $100,000 The statement is incorrect. The capital gain in whole amount will be assessed within the year it was disposed. S 116-20
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3106AFE Revenue Law Trimester 2, 2017 (c) Net capital losses are not deductible against any assessable income other than a capital gain. The statement is correct. The capital loss can only be offset versus capital gain.
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