On 7 March 2020, Derek Gridlock, a resident taxpayer sold land and buildings for $2,800,000. Derek had originally paid $760,000 for a vacant block of land measuring 1,800 square metres on 12 July 2013.

The buildings constructed on the land included his private residence (constructed during 2014/15 at a cost of $500,000) and an investment property (also constructed during 2014/15 at a cost of $280,000). 

Each of these buildings sold with half of the original land (i.e. 900 square metres).

Derek did not dispose of any other assets subject to capital gains during the 2019/20 tax year.

Briefly explain the key principle of capital gains tax.

Calculate Derek's net capital gain in respect of the 2019/20 tax year (after allowing for the main residence exemption).

Consider what source documents would be used to substantiate the capital gain calculation?

At which item in Derek's tax return would the capital gain amount be reflected. 

What rate of tax would Derek pay?

Name 3 ways any resulting tax could be paid to the ATO?