HI5028 TAXATIONT2, 2013 ASSIGNMENT 1Due date: Friday 30
th August
Instructions: This assignment is to be submitted by the due date in both soft-copy (Safeassign – Bb) and hard copy.
The assignment is to be submitted in accordance with assessment policy stated in the Subject Outline and Student Handbook
It is the responsibility of the student submitting the work to ensure that the work is in fact his/her own work. Ensure that when incorporating the works of others into your submission that it appropriately acknowledged.
Maximum marks: 20 (20%)
Assignment 1: You should attempt both parts to this assignment
Note: you should incorporate all sections of the various Acts/regulations where appropriate.
Part 1: Case studyJanet (taxpayer) residing in Australia is named as the sole beneficiary of a property (1.85 hectares) with a large homestead as a result of the death of a relative on 7/10/2009. The property is not used for commercial purposes and at the date of death, the property was valued at $1.45million. Settlement took place on 21/12/2009. After moving into the homestead shortly after taking ownership, she planned to take a one-year trip which she had been planning for some time in late 2010. The taxpayer felt that the homestead was far too large for her (she is single), applied to the ATO for an exemption for ABN registration and some fourteen months later (16/2/2011), she obtained council approval to subdivide the property into three, with the intention of building three units, one she will take up as her own residence, the other two will be sold. Work commenced some weeks after approval and on 12
th December that same year, the taxpayer returned and moved into one of the apartments. The other two were sold in March/April in 2012, one selling for $1.35m (24/3/2012), the other for $1.45m (9/4/2012).
You are to consider the CGT implications both from the relevant sections (ITAA), rulings, etc. and from the values (if/where applicable). Assume that the blocks are subdivided equally. For each determination that you make, you should clarify. You should also clarify what Capital Gains and CGT is in your answer (15 marks)
Part 2: QuestionExplain using examples and relevant sections of the act, what the differences between Ordinary Income and Statutory income are. Use your own examples (not from MTG or Barkoczy text) (5 marks)