Question

In May 2010 Gemma entered into the following transactions:

She sold her Holden Astra motor vehicle for $15,000. She had bought it in March 2008 for $23,000.

She gave her road bike, which she used to ride socially on weekends, to her brother. She had bought the road bike in May 2008 for $5,000 and it had a market value in May 2010 of $2,000.

She sold a dress ring that she had bought for $4,000 in September 2009. She received $6,000 for it.

She sold some BHP shares she had bought in October 1999 for a total of $10,000. She received $15,000 for them but had to pay brokerage and stamp duty on the sale amounting to $1,000.

She sold a holiday apartment. The contract price for the sale was $180,000. The agent handling the sale charged her $9000 in commission and her lawyer charged her $1,000 to do the conveyancing. During the period she owned the cottage she had also spent $20,000 in capital improvements.   She had inherited the apartment from her grandmother in January 2003 and it had a deemed cost base of $152,000.

Required:

Giving reasons, calculate her net capital gain or net capital loss for 2009-10.

Answer 1

Personal effects, i.e., movable property, including wearing apparel, furniture at home, motor car or any other vehicle held for personal use are not a capital asset.

Hence the motor vehicle & road bike are not capital asset & are not taxable.

Jewellery is a part of capital asset and therefore its taxable As the jewellery is kept for a small period of time gain on sale shall be short term capital gain which is (6000-4000=2000).

Shares hold for more than a year are Long term capital gain: 15000-1000-10000 = 4000

Holiday apartment Long term capital gain=180000-152000-9000-1000-20000=(2000).