Calculate Fred’s net capital gain for the current year. Assume he also has a net capital loss from last year of $10,000 arising from the sale of shares.
The date of disposal is assumed to be the date the contract was signed, i.e. August 2015. Cost base elements include:
1) Frozen indexation method (S. 102-5, ITAA 97)
To calculate the cost base of the property by using the frozen indexation method, Fred must first calculate the acquisition cost, incidental costs and the enhancement cost, as set out below:
Capital gain = $800,000 – ($151,700 + 1,100 + $9,900 + $3,034 + $1,517 + $24,440)
= $800,000 – $191,691
Net Capital Gain = $608,309 less carry forward loss of $10,000
2) Discount method (S. 102-5, ITAA97)
The calculation through discount method is outlined as follows:
Capital gain = $800,000 – ($100,000 + $1,100 + $ 9,900 + $2,000 + $1,000 + $20,000)
= $800,000 – $134,000
The Net Capital Gain will be calculated after the carry forward losses are deducted from the capital gain, i.e. $666,000 - $10,000 = $656,000
Net Capital Gain = 50% x $656,000
Certain capital gains and losses are matched against the other. The loss carried forward from the disposal of a collectable antique vase can only be offset against a collectable gain. Since, the disposal of Fred‟s house is an ordinary gain, the collectable loss cannot be offset against it. (S. 108-10, ITAA97) In such a case, the frozen indexation net capital gain would be $608,392.
Fringe benefit is a benefit provided by the employer to an employee in a form other than salary or wages. The taxes imposed on these benefits are termed as fringe benefit tax (FBT). This tax is levied on the taxable value of the benefits provided.