Legal but unenforceable contract Note that under contract law in general a

Legal but unenforceable contract note that under

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Legal but unenforceable contract Note that under contract law in general, a contract does not have to be in writing to be valid (it can be oral), so in most instances both oral and written contracts are binding; BUT in SOME situations, legislation states a contract has to be in writing to be enforceable (real estate); In such an instance an oral contract is still a legal contract, it is just not enforceable; So, say on 1 Jan 2012 you make an oral contract to sell land, to settle in 1 July 2012 – but don’t make a written contract at that time – it is not enforceable. Assume that the transfer of land is conducted and paid for on 1 July 2012 in accordance with the oral contract; McDonalds v FCT (1998): In this situation, time of Event = time of making the contract (ie 1 Jan 2012 - even if unenforceable); Modified Contract : FCT v Sara Lee: If subsequent agreement merely modifies original contract, then go by date of original contract. Capital Proceeds s116-20(1):
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CP = what you receive + what you’re entitled to receive from the CGT event (whether cash or property); Usually, the CP will be sales price A1 EVENT: DISPOSAL OF CGT ASSET (s104-10) Time of event: when disposal contract is entered into OR if none when entity stops being owner Capital Gain is : Capital Proceeds (CP) – Cost Base (CB) Capital Loss is : Reduced Cost Base (RCB) – CP C1 EVENT: LOSS OR DESTRUCTION OF A CGT ASSET(s104-20) Time of Event : When compensation is first received OR if NONE when loss discovered or destruction occurred Capital Gain is : CP – CB Capital Loss is: RCB – CP C2 EVENT: CANCELLATION, SURRENDER AND SIMILAR ENDINGS(s104-25) Time of Event : When contract ending, asset entered into or IF NONE when asset ends Capital Gain is : CP from ending – assets CB Capital Loss is : RCB – CP D1 EVENT: CREATING CONTRACTUAL RIGHT OR OTHER RIGHTS(s104-35) Time of Event: When contract is entered into or right created Capital Gain is : CP from creating right – Incidental cost of creating right Capital Loss is : Incidental cost of creating right – CP F1 EVENT: GRANTING A LEASE (s104-110) Time of event : When entity enters into lease contract or, IF NONE, at start of Lease renewal or Extension –at start of renewal or extension Capital Gain is: CP – expenditure on grant, renewal or extension Capital Loss is: Expenditure on grant, renewal or extension – CP H2 EVENT: RECEIPT FOR EVENT RELATING TO CGT ASSET(s104-150) Time of Event: When Act, transaction or event occurred Capital Gain is: CP – Incidental Costs Capital Loss is : Incidental costs - CP MODIFICATIONS CP: six situation where general rule can be modified A) MARKET VALUE SUBSTITUTION RULE s116-30: CP = Market value of the CGT asset time of event if: No consideration (GIFT) OR NON ARMS LENGTH TRANSACTION. So will be valued at market value if mother sells child house under market rate. AS long as Arms length transaction/commercial terms relatives can deal at arms length.
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