LAW 6001 Taxation Law Assessment Brief 3 Case Study

Question 5 (15 marks)

Maurice is an individual tax resident of Australia for tax purposes. He has the following assets:
• His home was acquired on 20 February 1989 for $140 000. The home was never used for any income producing purpose. The estimated market value of the house on 1
March 2018 is $310 000
• Shares in FUL Pty acquired on 10 April 1984 at a cost of $15 000.
• Furniture acquired on 20 May 2010 for $9 500.
• Block of vacant land acquired on 20 June 1997 at a cost of $100 000. The estimated market value of the vacant block on 15 May 2018 is $475 000. Maurice subsequently sold the following assets:
• His home was sold on 1 March 2018 for $325 000
• The FUL Shares were sold on 15 March 2018 for $19 000
• The furniture was sold on 1 May 2018 for $5 000
• The block of vacant land was sold on 15 May 2018 for $465 000.
Maurice also has a carry forward capital loss of $12 500 from the sale of an antique drumkit and a carry forward capital loss $5 000 from the sale of underperforming shares in an earlier income year. Maurice is not a share trader. Maurice has also incurred interest expenses on the vacant block of land of $110 000 over the time he owned the vacant block. He never used the vacant block for any income producing purpose.

Required:

With reference to relevant legislation and cases calculate the net capital gain or loss as applicable for Maurice for the 2017/18 income year.