Question 2 Suman was a resident of Australia and gained a number of assets over the 40 year since his graduation. These were: a. On 1st July 1990 he bought his home at Burwood for $400,000 and lived there with his wife and children until he sold it on 1st June 2019 for$1,200,000. b. Then, on 1st January 2000, Suman had bought a vacant block of land for $150,000 and since that date, he has paid rates and taxes totalling $50,000 on the block of land up to 30th June 2019. His incidental costs in buying and sell- ing the land amount to $40,000. On the 30th June 2019, Suman sold the vacant block of land for $300,000. c. On the 1st July 2010, he had some spare money in his bank account which he used to buy 1,000 BHP shares for $20 per share. He sold them all on the 30th June 2019 for $35 per share. d. Suman's Uncle died on the 1st Jan 2019 and left Suman a bequest of $40,000 which he received on the 30th June 2019. Explain how these transactions would be dealt with having regard to the capital gains legislation and calculate the net amount that would be added to his assess- able income as statutory income for the year ending 30 June 2019. (Australia) You must give reasons for your answer. Your discussion must include an analysis of the pertinent sections of the relevant legislation, rulings and the relevant case law. You must apply the law to the facts given in this question and provide YOUR OWN analysis of the issues. Calculations must be included where relevant. FBT year FBT rate Ending 31 March 2014 (and prior years) 46.5% Ending 31 March 2015 47.00% Ending 31 March 2016 and 31 March 2017 49.00% Ending 31 March 2018 and 2019 and 2020 47.00% FBT year Type 2 gross-up rate Ending 31 March 2014 (and prior years) 1.8692 Ending 31 March 2015 1.8868 Ending 31 March 2016 and 31 March 2017 1.9608 Ending 31 March 2018 and 2019 and 2020 1.8868 FBT year Type 1 gross-up rate Ending 31 March 2014 (and prior years) 2.0647 Ending 31 March 2015 2.0802 Ending 31 March 2016 and 31 March 2017 2.1463 Ending 31 March 2018 and 2019 and 2020 2.0802 Nil Individual Resident Income Tax Rates Resident tax rates 2019 tax year (year ended 30 June 2019) Taxable income Tax on this income $0 - $18,200 $18,201 - $37,000 19c for each $1 over $18,200 $37,001 - $90,000 $3,572 plus 32.5c for each $1 over $37,000 $90,001 - $180,000 $20,797 plus 37c for each $1 over $90,000 $180,001 and over $54,097 plus 45c for each $1 over $180,000 These rates do not include the Medicare levy of 2%. Resident tax rates 2018 tax year (year ended 30 June 2018) Taxable income Tax on this income $0-$18,200 $18,201 - $37,000 | 19c for each $1 over $18,200 $37,001 - $87,000 $3,572 plus 32.5c for each $1 over $37,000 $87,001 $180,000 $19,822 plus 37c for each $1 over $87,000 $180,001 and over $54,232 plus 45c for each $1 over $180,000 These rates do not include the Medicare levy of 2%. Nil Question 2 Suman was a resident of Australia and gained a number of assets over the 40 year since his graduation. These were: a. On 1st July 1990 he bought his home at Burwood for $400,000 and lived there with his wife and children until he sold it on 1st June 2019 for$1,200,000. b. Then, on 1st January 2000, Suman had bought a vacant block of land for $150,000 and since that date, he has paid rates and taxes totalling $50,000 on the block of land up to 30th June 2019. His incidental costs in buying and sell- ing the land amount to $40,000. On the 30th June 2019, Suman sold the vacant block of land for $300,000. c. On the 1st July 2010, he had some spare money in his bank account which he used to buy 1,000 BHP shares for $20 per share. He sold them all on the 30th June 2019 for $35 per share. d. Suman's Uncle died on the 1st Jan 2019 and left Suman a bequest of $40,000 which he received on the 30th June 2019. Explain how these transactions would be dealt with having regard to the capital gains legislation and calculate the net amount that would be added to his assess- able income as statutory income for the year ending 30 June 2019. (Australia) You must give reasons for your answer. Your discussion must include an analysis of the pertinent sections of the relevant legislation, rulings and the relevant case law. You must apply the law to the facts given in this question and provide YOUR OWN analysis of the issues. Calculations must be included where relevant. FBT year FBT rate Ending 31 March 2014 (and prior years) 46.5% Ending 31 March 2015 47.00% Ending 31 March 2016 and 31 March 2017 49.00% Ending 31 March 2018 and 2019 and 2020 47.00% FBT year Type 2 gross-up rate Ending 31 March 2014 (and prior years) 1.8692 Ending 31 March 2015 1.8868 Ending 31 March 2016 and 31 March 2017 1.9608 Ending 31 March 2018 and 2019 and 2020 1.8868 FBT year Type 1 gross-up rate Ending 31 March 2014 (and prior years) 2.0647 Ending 31 March 2015 2.0802 Ending 31 March 2016 and 31 March 2017 2.1463 Ending 31 March 2018 and 2019 and 2020 2.0802 Nil Individual Resident Income Tax Rates Resident tax rates 2019 tax year (year ended 30 June 2019) Taxable income Tax on this income $0 - $18,200 $18,201 - $37,000 19c for each $1 over $18,200 $37,001 - $90,000 $3,572 plus 32.5c for each $1 over $37,000 $90,001 - $180,000 $20,797 plus 37c for each $1 over $90,000 $180,001 and over $54,097 plus 45c for each $1 over $180,000 These rates do not include the Medicare levy of 2%. Resident tax rates 2018 tax year (year ended 30 June 2018) Taxable income Tax on this income $0-$18,200 $18,201 - $37,000 | 19c for each $1 over $18,200 $37,001 - $87,000 $3,572 plus 32.5c for each $1 over $37,000 $87,001 $180,000 $19,822 plus 37c for each $1 over $87,000 $180,001 and over $54,232 plus 45c for each $1 over $180,000 These rates do not include the Medicare levy of 2%. Nil