Assignments’ Instructions and Requirements QUESTION 1-
The City Sky Co is a property investment and developmentcompany. Recently the company purchased a vacant piece of landsouth of Brisbane on which it is planning to build 15 apartments tosell. The City Sky Co has engaged the services of the local lawyer,Maurice Blackburn, to provide the legal services required for thedevelopment for $33,000. Maurice Blackburn runs an established soletrader business and turns over revenue of $300,000 per year.
Advise The City Sky Co of the input tax credit entitlementsthat they may be entitled to. Assume that The City Sky Co isregistered for GST purposes.
QUESTION 2 -
Emma has provided to you a listing of the transactions she hasundertaken throughout the financial year to assist you incompleting her 2015 income tax return.
Sale of a block of land for $1,000,000: Emma purchased theland as an investment in 1991. The purchase price was $250,000,plus $5,000 in stamp duty, $10,000 in legal fees. To fund thepurchase, she took out a loan on which she paid interest totalling$32,000. During the period of ownership her council rates, waterrates and insurance totalled $22,000. In January 2005 a disputeoccurred with a neighbour over the use of the land and legal feesincurred amounted to $5,000 in resolving this dispute. Beforeputting the property on the market $27,500 was spent to remove anumber of large dangerous pine trees that were on the land.Advertising, legal fees and agent’s fees on the sale of the landwere $25,000.
Sale of Emma’s 1000 shares in Rio Tinto for $50.85 per share:Emma paid brokerage fee of 2% on the sale. Emma initially purchasedthe shares for $3.5 per share in 1982.
Sale of a stamp collection Emma had purchased, from a privatecollector, in January 2015 for $60,000: Emma sold the collection atauction for $50,000. Auction fees totalled $5,000 for thesale.
Sale of a grand piano for $30,000: It was initially bought for$80,000 in 2000.
HI6028 Taxation Theory, Practice and Law Individual AssignmentT2.2019 4
Advise Emma of the capital gain tax (CGT) consequences of hertransitions. Ignore indexation. Your answer must include referencesto relevant tax law and or cases.
