Whether the gain generated from the sale of painting to be chargeable as capital gain in the hand of assessee?
Law:
Section 6 of the Income Tax Law defines the assessable income. According to it, assessable income of the taxpayer for the relevant income year means the aggregate of ordinary income and taxable statutory income.
S104 of the Income Tax Act provides that the assessee must include in his/her assessable income the net amount generated by way of sale of capital asset held by him/her during the income year under consideration.
According to 102-20, the capital gain tax is attracted only when CGT event takes place. The section further provides that CGT event takes place when assessee transfers the capital Asset during the income …show more content…
The term artwork includes Painting.
118- 10(1) provides that no capital gain shall be imposed if the assessee has acquired the Collectibles for value less than $500.
S 108-10(1) further provides that the capital loss from transfer of Collectibles can be set off only against the capital gain from transfer of Collectibles.
S 104-10(2) provides that CGT event takes places when assessee transfers the capital asset.
S 110-25(1) defines the Cost Base as the cost of the asset when purchased.
If the asset is held for more than 12 months assessee can claim deduction of 50% discount.
Application:
In the given case the client has acquired painting in the year 2000. The painting so acquired can be treated as Collectibles within the meaning of Income Tax Act. At the time of acquisition of 50% interest she has paid $400 and at the time of acquisition of remaining interest she has paid $1000. Hence her cost base for the purpose of capital gain calculation will be $1400.
She has transferred painting in the month of January 2016 for $5,000. This will attract capital gain tax event.
Client has accumulated capital loss $1,000from transfer of
Law:
Section 6 of the Income Tax Law defines the assessable income. According to it, assessable income of the taxpayer for the relevant income year means the aggregate of ordinary income and taxable statutory income.
S104 of the Income Tax Act provides that the assessee must include in his/her assessable income the net amount generated by way of sale of capital asset held by him/her during the income year under consideration.
According to 102-20, the capital gain tax is attracted only when CGT event takes place. The section further provides that CGT event takes place when assessee transfers the capital Asset during the income …show more content…
The term artwork includes Painting.
118- 10(1) provides that no capital gain shall be imposed if the assessee has acquired the Collectibles for value less than $500.
S 108-10(1) further provides that the capital loss from transfer of Collectibles can be set off only against the capital gain from transfer of Collectibles.
S 104-10(2) provides that CGT event takes places when assessee transfers the capital asset.
S 110-25(1) defines the Cost Base as the cost of the asset when purchased.
If the asset is held for more than 12 months assessee can claim deduction of 50% discount.
Application:
In the given case the client has acquired painting in the year 2000. The painting so acquired can be treated as Collectibles within the meaning of Income Tax Act. At the time of acquisition of 50% interest she has paid $400 and at the time of acquisition of remaining interest she has paid $1000. Hence her cost base for the purpose of capital gain calculation will be $1400.
She has transferred painting in the month of January 2016 for $5,000. This will attract capital gain tax event.
Client has accumulated capital loss $1,000from transfer of