Question 1

In relation to CGT, which of the following statements are correct? Explain your answer citing the relevant law.

(a)Jennie gave her brother James a house that she owned in Springwood because he recently lost all of his assets in a weather disaster. Jennie has owned the house for 10 years and was previously renting it to tenants. If James sells the house sometime in the future, the house will be treated as a gift and no CGT will be payable.

(b)Julia sold her boat for a total price of $30, 000. She agrees to receive payments from the buyer in three equal payments of $10,000 over a two-year period. The first payment is to be made on collection of the boat and the remaining two payments are to be made in 12-month instalments. Capital Gains Tax will be recognised for each individual payment in the year it is received.

(c)Jackson sold some Telstra shares and made a gain of $800. Jackson also sold a painting and made a loss of $300. Jackson can reduce the gain on the shares by the loss made on the sale of the painting.

(d)Lucinda sold her leather lounge and made a loss of $2,000. She should be able to reduce any capital gains made in the current tax year by the loss on the sale of the lounge.

On 15 July 2019 Elijah signs a contract with Top Notch Builders to construct a building on land that Elijah acquired on 8 March 2018.Building work commences on 6 November 2019 and the construction is completed on 13 February 2020.Elijah has acquired the building for CGT purposes on 13 February 2020.