On 30 October 1995, Brett Dutton bought an investment house in Port Campbell, Victoria He has kept all the relevant financial evidence for capital gain tax purposes Purchase price of the property $160,000 1 st Element of the cost base Accountants Advice $500 Second Element Incidental cost Stamp duty on property $3150 Second Element Incidental cost Other fees $250 Second Element Incidental cost Commission on Sale $6750 Second Element Incidental cost Advertising cost $600 Second Element Incidental cost Interest on the loan $25,800 Third Element Operating costs this amount has already been used to reduce the assessable income in the earlier years Insurance costs $3,500 Third Element Operating costs this amount has already been used to reduce the assessable income in the earlier years Repair costs $1800 Third Element Operating costs this amount has already been used to reduce the assessable income in the earlier years Rates land Tax $6,900 Third Element Operating costs this amount has already been used to reduce the assessable income in the earlier years A personal loan is taken to refurbish the laundry and bathroom $45,000 Fourth Element Capital Costs Interest on Personal loan taken to refurbish the laundry and bathroom $5,000 Third Element Operating costs This expense has not been deducted yet Selling Price of the property at the current date (2021 tax year) $260,000 Required (a) Calculate Brett's capital gain using the discount method In your response, you must use the correct sequence to demonstrate the reduction of capital gain (b) Use the result from the above question (a) and assume the taxpayer also has another capital loss of $ $20,375 What would be his TAXABLE INCOME if he has earned other income from a salary of $55,000 during that year

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Posted on Jul 15, 2021

On 30 October 1995, Brett Dutton bought an investment house in Port Campbell, Victoria. He has kept all the relevant financial evidence for capital gain

On 30 October 1995, Brett Dutton bought an investment house in Port Campbell, Victoria. He has kept all the relevant financial evidence for capital gain tax purposes.

Purchase price of the property	$160,000	1^st Element of the cost base
Accountant’s Advice	$500	Second Element-Incidental cost
Stamp duty on property	$3150	Second Element-Incidental cost
Other fees	$250	Second Element-Incidental cost
Commission on Sale	$6750	Second Element-Incidental cost
Advertising cost	$600	Second Element-Incidental cost

Interest on the loan	$25,800	Third Element- Operating costs-this amount has already been used to reduce the assessable income in the earlier years.
Insurance costs	$3,500	Third Element- Operating costs-this amount has already been used to reduce the assessable income in the earlier years.
Repair costs	$1800	Third Element- Operating costs-this amount has already been used to reduce the assessable income in the earlier years.
Rates & land Tax	$6,900	Third Element- Operating costs-this amount has already been used to reduce the assessable income in the earlier years.


A personal loan is taken to refurbish the laundry and bathroom	$45,000	Fourth Element- Capital Costs
Interest on Personal loan taken to refurbish the laundry and bathroom	$5,000	Third Element- Operating costs- This expense has not been deducted yet.

Selling Price of the property at the current date (2021 tax year)	$260,000

Required:

(a) Calculate Brett's capital gain using the discount method. In your response, you must use the correct sequence to demonstrate the reduction of capital gain.

(b) Use the result from the above question (a) and assume the taxpayer also has another capital loss of $ $20,375. What would be his TAXABLE INCOME if he has earned other income from a salary of $55,000 during that year?