Question 3 Keith and Wendy have recently retired and have decided to purchase an apartment in Southbank, Melbourne, to be their future main residence. In order to finance this purchase, and to assist in financing their retirement ,they wish to dispose of a number of assets. They have come to you to seek advice as to the possible tax implications of the following disposals. A family home in Warragul, Victoria. They purchased this home in December 1999 and it has been their main residence since then. They purchased the property for $210,000 and hope to sell it for around $850,000. An investment property in the Melbourne suburb of Hawthorn. They purchased this property in March 1992 for a cost of $150,000. They also paid $5,000 in stamp duty and $1,600 in legal fees on the purchase. They hope to realise $2,400,000 from its sale but will have to pay agents fees of 2.0% on its sale, plus legal costs of $2,500. Note: The relevant indexation factor for the Hawthorn property is 68.7/59.9 = 1.147. Wendy wishes to sell a portfolio of shares which she purchased in March 2003 for $51,000. They are now valued at $105,000. In 2001, Keith purchased some shares in an Australian exploration company for $10,000. They are now worth around $4,000.00. He asks your advice as to whether disposing of those shares now would be of any taxation benefit. Your task: Advise Keith and Wendy of the Capital Gains Tax implications of the following disposals: i. li. The sale of the family home (1 marks) The sale of the investment property: Calculate the capital gains tax on this property using both the discount and indexation method. (6 marks) The sale of Wendy's shares purchased in 2003 (4 marks) The sale of Keith's shares purchased in 2001 (4 marks). iii. iv. Ahmed makes floor lamps and sells them through his website "Lighten Up". Ahmed's books of account provide the following information