Capital Gains

Card Set Information

Capital Gains
2012-03-01 06:45:02

CA Taxation Semester 1 2012
Show Answers:

  1. True or False: A capital loss can be applied to reduce a taxpayer's ordinary income.
    False - a capital loss can only reduce a taxpayer's capital gain. Where capital losses exceed capital gains, the excess is quarantined and carried forward.
  2. True or False: A company whic disposes of a CGT asset is entitleed to the CGT discount.
    False - this is only availabe to individuals, trusts and compying superannuation funds.
  3. True or False: The relevant timing for when a CGT event occurs is generally when a contract is made.
    True – note that when no contract is involved, the CGT event is generally when there is a change in beneficial ownership.
  4. True or False - For an indivudal to acquire an asset, a CGT event does not need to occur
    True – for example, the issue of shares by a company.
  5. True or False - Where an asset is disposed of during thetax year, the capital proceeds only include the sum of any money received and/or the market value of any property received during the year.
    False – s. 116-20 includes amounts to be received in the future.
  6. True or False - The cost base of an asset acuqired would include any liabiltiy assumed on acquisition of the asset where the asset is subject to the liability.
    True – s. 112‑35.
  7. True or False - A discount is availabe to an individual where the asset was acquired before 21 September 1999 and a CGT event occurred during during the 2011 financial year.
    True – note that indexation would also be available to determine a capital gain using the indexed cost base, rather than the discount method.
  8. True or False - Carried forward and current year capital losses must first be offset against capital agins before the gains can be discount.