HI5028 TAXATION
T2, 2014 ASSIGNMENT 1
Due date: Friday Week 6
Instructions:
This assignment is to be submitted by the due date in both soft-
copy (Safeassign – Bb) and hard copy.
The assignment is to be submitted in accordance with
assessment policy stated in the Subject Outline and Student
Handbook
It is the responsibility of the student submitting the work to ensure
that the work is in fact his/her own work. Ensure that when
incorporating the works of others into your submission that it
appropriately acknowledged.
Maximum marks: 20 (20%)
Assignment 1: You should attempt both parts to this assignment
Note: you should incorporate all sections of the various Acts/regulations
where appropriate.
Part 1: Case study
Janet (taxpayer) residing in Australia is named as the sole beneficiary of a
property (1.85 hectares) with a large homestead as a result of the death
of a relative on 7/10/2010. The property is not used for commercial
purposes and at the date of death, the property was valued at
$1.45million. Settlement took place on 21/12/2010. After moving into the
homestead shortly after taking ownership, she planned to take a one-year
trip which she had been planning for some time in late 2011. The taxpayer
felt that the homestead was far too large for her (she is single), applied to
the ATO for an exemption for ABN registration and some fourteen months
later (16/2/2012), she obtained council approval to subdivide the property
into three, with the intention of building three units, one she will take up as
her own residence, the other two will be sold. Work commenced some
weeks after approval and on 12th December that same year, the
taxpayer returned and moved into one of the apartments. The other two
were sold in March/April in 2013, one selling for $1.35m (24/3/2013), the
other for $1.45m (9/4/2013).
You are to consider the CGT implications both from the relevant sections
(ITAA), rulings, etc. and from the values (if/where applicable). Assume that
the blocks are subdivided equally. For each determination that you make,
you should clarify. You should also clarify what Capital Gains and CGT is in
your answer (15 marks)
Part 2: Question
Explain using examples and relevant sections of the act, what the
differences between Ordinary Income and Statutory income are. Use your
own examples (not from MTG or Barkoczy text) (5 marks)

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