Question

# Q1 (Disposal of two assets) On 10 April 1988, Penny Pleb, an Australian resident, purchased a...

Q1 (Disposal of two assets)

On 10 April 1988, Penny Pleb, an Australian resident, purchased a block of land for \$74,000 as an investment. On 19 February 2018, she sold the land for \$125,000.

Penny also sold shares in Prosperous Ltd for \$32,000 on 1 August 2017. The shares had cost Penny \$8,000 on 17 July 2009. Penny did not dispose of any other assets during the year, nor did she have any capital losses from previous years.

Required:

Calculate the minimum net capital gain for the 2017/18 tax year. Use a combination of the indexed and discount methods, where allowed. (Show your workings).

1. The indexation factor is the CPI for September 1999 quarter divided by the CPI for June 1988 quarter.
2. His indexed cost base is his cost (\$74000) multiplied by the indexation factor.

 Capital Proceeds from sale of land 125,000 Less: Cost base= \$74,000 * (68.7/49.3) = 74,000 x 1.3935 103,120 Capital Gain (a) 21,880 Capital Proceeds from Shares 32000 Less: Cost base 8000 Capital Gain 24000 Less: Discount @ 50% 12000 Net Capital Gains (b) 12,000 Total (a+b) \$33,880

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