Capital Gain Tax

Instruction: Please do research and then explain the following exercises in your own opinion and understanding, also make sure to input references (if any) as well.

Q1. During the income year, Bill made the following capital gains:

1. Capital gain of $10,000 on the sale of his shares in X Co (this is not a discount capital gain)

2. Capital gain of $10,000 on the sale of his shares in Y Co (this is a discount capital gain. He is eligible for a 50% discount)

He also made a capital loss of $5,000 on the sale of his land and he has a net capital loss from last year of $3,000.

Required: Calculate Bills net capital gain.

Q2. In 2008, Barney purchased a holiday home near the beach for use by his family on weekends for $700,000. Barney was required to pay $40,000 stamp duty in respect of the transfer. He borrowed money from a bank to fund some of the purchase price and paid $20,000 in interest on the loan. Last year, he also paid $33,000 to a builder to renovate the kitchen in the property.

Required: Whats the cost base of the property?

Q3. Company X acquired a CGT asset in March 1987 for $100,000. Company X sold the asset in January 2016 for 80,000.

Required: Whats the net capital gain/loss using indexation method?

Q4. Mary acquired a CGT asset in March 1987 for $100,000. She sold the asset in January 2016 for 200,000.

Required: Whats the net capital gain/loss using discount method?

Q5. John acquired a CGT asset in June 1987 for $500,000. He sold the asset in January 2016 for 300,000.

Required: Whats the net capital gain/loss using the indexation method and Discount method.