This assignment aims at assessing students on the Learning Outcome from 1 to 4 as mentioned above.
Assessment task:
Question 1
Your client Helen wants to fund her business as a fashion designer, therefore she has sold some of the assets
as follows:
1- An antique impressionism painting Helen’s father bought in February 1985 for $4,000. Helen sold the
painting on 1 December 2018 for $12,000.
2- Helen sold her historical sculpture on 1 January 2018 for $6,000. She has purchased the piece on
December 1993 for $5,500.
3- An antique jewelry piece purchased in October 1987 for $14,000. Helen sold the antique jewelry
piece on 20 March 2018 for $13,000.
4- Helen sold a picture for $5,000 on 1 July 2018. Her mother purchased the picture in March 1987 for
$470.
Advise the Capital Gain Tax consequences of the above transactions.
Question 2
Barbara is an economist researcher and commentator. The Eco Books Ltd offers her $13,000 for writing a book
about economics principles. Barbara has never written a book about economics principles, but accepts the
offer and writes the economics book called ‘Principles of Economics’. She assigns the book’s copyright for
$13,400 to The Eco Books Ltd. The book is published and she is paid. She also sells the book’s manuscript to
the Eco Books Ltd’s library for $4,350 plus several interview manuscripts she has collected while writing the
economics book for which she receives $3,200.
Discuss each of the above payments to Barbara separately and states if these are income from Barbara’s
personal exertion. (2.5 marks) Would your answer differ if Barbara wrote the Principles of Economics’ book
before signing a contract with The Eco Books Ltd in her spare time and only decided to sell it later? (2.5
marks) Support your answer by referring to relevant statutory and case law.
Question 3 (5 marks)
Patrick paid $52,000 to his son David to provide some assistance in his newly started business. They agreed
that David repay his father $58,000 at the end of five years. Patrick provided this loan to David without any
formal agreement or security deposit for the sum lent. Patrick told his son that he need not pay interest.
However, David repaid the full amount after two years through a cheque, which was included an additional
amount equal to 5% on the amount borrowed.
By referring to relevant statutory and case law, you need to discuss the effect of these arrangement on the
assess able income of Patrick.
Page 3 of 5
HI6028 Taxation Theory, Practice and Law Individual Assignment T1 2019
Assignment structure should be as the following (students responses involves calculations, and
students must refer to the relevant legislation and cases whenever required according to the
questions).
Questions 1:
Capital Gain Tax regarding antique impressionism painting
Capital Gain Tax regarding historical sculpture
Capital Gain Tax regarding antique jewelry piece
Capital Gain Tax regarding picture
Questions 2:
Discuss Barbara ‘s income under the case scenario
Discuss Barbara ‘s income under the alternative scenario
Questions 3:
Discuss the effect of these arrangement on the assess able income of Patrick
Marking criteria
Marking criteria Weighting
Question 1
Capital Gain Tax regarding antique impressionism painting
Capital Gain Tax regarding historical sculpture
Capital Gain Tax regarding antique jewellery piece
Capital Gain Tax regarding picture
Question 2
Discuss Barbara ‘s income under the case scenario
Discuss Barbara ‘s income under the alternative scenario
Question 3
Discuss the effect of these arrangement on the assess able income of Patrick
Sample Solution
