Individual Assignment Specifications

Purpose:
This assignment aims at assessing students on the Learning Outcome from 1 to 4 as mentioned above.
Assessment task:
Question 1 (10 marks)
Your client Helen wants to fund her business as a fashion designer, therefore she has sold some of the assets as follows:
1- An antique impressionism painting Helen’s father bought in February 1985 for $4,000. Helen sold the painting on 1 December 2018 for $12,000. (2.5 marks)
2- Helen sold her historical sculpture on 1 January 2018 for $6,000. She has purchased the piece on December 1993 for $5,500. (2.5 marks)
3- An antique jewellery piece purchased in October 1987 for $14,000. Helen sold the antique jewellery piece on 20 March 2018 for $13,000. (2.5 marks)
4- Helen sold a picture for $5,000 on 1 July 2018. Her mother purchased the picture in March 1987 for $470. (2.5 marks)
Advise the Capital Gain Tax consequences of the above transactions.
Question 2 (5 marks)
Barbara is an economist researcher and commentator. The Eco Books Ltd offers her $13,000 for writing a book about economics principles. Barbara has never written a book about economics principles, but accepts the offer and writes the economics book called ‘Principles of Economics’. She assigns the book’s copyright for $13,400 to The Eco Books Ltd. The book is published and she is paid. She also sells the book’s manuscript to the Eco Books Ltd’s library for $4,350 plus several interview manuscripts she has collected while writing the economics book for which she receives $3,200.
Discuss each of the above payments to Barbara separately and states if these are income from Barbara’s personal exertion. (2.5 marks) Would your answer differ if Barbara wrote the Principles of Economics’ book before signing a contract with The Eco Books Ltd in her spare time and only decided to sell it later? (2.5 marks) Support your answer by referring to relevant statutory and case law.
Question 3 (5 marks)
Patrick paid $52,000 to his son David to provide some assistance in his newly started business. They agreed that David repay his father $58,000 at the end of five years. Patrick provided this loan to David without any formal agreement or security deposit for the sum lent. Patrick told his son that he need not pay interest. However, David repaid the full amount after two years through a cheque, which was included an additional amount equal to 5% on the amount borrowed.
By referring to relevant statutory and case law, you need to discuss the effect of these arrangement on the assessable income of Patrick. (5 marks)
Page 3 of 5
HI6028 Taxation Theory, Practice and Law Individual Assignment T1 2019
Assignment structure should be as the following (students responses involves calculations, and students must refer to the relevant legislation and cases whenever required according to the questions).
Questions 1:
Capital Gain Tax regarding antique impressionism painting
Capital Gain Tax regarding historical sculpture
Capital Gain Tax regarding antique jewellery piece
Capital Gain Tax regarding picture
Questions 2:
Discuss Barbara ‘s income under the case scenario
Discuss Barbara ‘s income under the alternative scenario
Questions 3:
Discuss the effect of these arrangement on the assessable income of Patrick

Solution

Taxation Law
Question One
When a person purchases capital assets, they change in value either positively or otherwise. Depreciation or appreciation of the assets’ value represents the variance that has taken place between the purchase and selling price. The alteration in the value of assets considers incidental costs of sale and purchase. Where capital assets are sold for a higher price than the money spent in its acquisition, there is an incident of capital gains. Conversely, where the asset is sold for a lesser price than the one for which it was acquired, there is an incident of capital loss on the side of the trader. Taxes are imposed on capital gains in circumstances where the assets are disposed. However, the Australian law provides for circumstances that exempt imposition of the taxes like when a family home is sold at a higher price than it was acquired (Huizinga, Voget & Wagner, 2018). The revenue collecting authorities are tasked with the obligation of collecting taxes on capital gains from the citizens.
Antique painting
In February of the year 1985, Helen acquired an antique painting at $4000. In line with the Australian law, assets held for more than one year are deemed to be long-term in nature, and this is the case with the painting because it remained in her ownership until the year 2018. The painting’s disposal in the year 2018 brought proceeds of $12,000. Compared to the acquisition price of $4000, there is a significant rise in the cost and the capital gains measure at $8000…………To access the rest of the solution for $10, please click on the purchase button.