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Homework answers / question archive / 1
1.The transfer of a trust's corpus from settior to trustee is a CGT Event False True as long as the trustee signs a waiver guaranteeing that the settlor is not liable for any debts incurred by the trust True Only if the corpus is valued at greater than $5,000
2. A Gerry purchased a car for $13,000 on 3 August 2015 and sold it for $18,000 on 25 November 2019 B Michael purchased a ticket in a lottery for a new home worth $500,000. He won the home and received it on 12 September 2019. He is currently using it as his home George injured his arm in a work accident and was given $10,000 in compensation for the personal injury D Philip purchased 1,000 shares in SOLAR for $9.00 each on 12 March 2015. He sold them for $11 each on 23 May 2019
Daniel purchased a rental property on 3 July 2018 and immediately rented it out earning $520 per week in rental income. He paid the following amounts in relation to the property: Purchase price $400,000 Stamp duty on purchase $3,500 Legal fees to transfer title to him $1,300 Interest paid on loan to purchase the property $28,000 Extension to main bedroom $14,000 Rates paid to the local council $1,500 What will be Daniel's cost base of the rental property for CGT purposes based on the above expenditure? A $448,300 B $420,300 C $418,800 D) $417,500
Gifts are: A Never tax-deductible B Always tax-deductible Deductible if they fall within categories specified in the ITAA D Deductible if one person carries out work for another person and waives payment on the grounds that the work was 'a present'. Question 12 1 Point A tax payer can deduct from his/her assessable income any loss or outgoing to the extent that: A It is incurred in gaining or producing the person's assessable income B The person has signed a declaration saying that all losses and outgoings incurred are 'for the benefit of the employer' The loss or outgoing was incurred on the weekend D None of the above
1.
ANSWER : FALSE
A trust is an arrangement by which property of the settlor is transferred to a trustee for the benefit of a third party, the beneficiaries
Settlor is the person who started out as the owner of the property that is to be transferred to and held by the trust.
Trustee is the person who holds the legal title to the trust estate. He is required to act in accordance with the terms of the trust for the benefit of trust beneficiaries
A transfer of trust corpus from settlor to trustee is not regarded as an actual transfer and hence it is not taxable under capital gain. Even if the trustee signs a waiver guaranteeing that the settlor is not liable for any debts incurred by the trust or the corpus is valued at greater than $5000, it doesn't amount to transfer. So it is not a CGT event.
2.
1. Following transactions will give rise to an assesable capital gain -
Option A - Gerry purchased a car for $ 13000 on 3 August 2015 and sold it for $ 18000 on 25 November 2019.
Option D - Phillip purchased 1000 shares in SOLAR for $ 9 each on 12 March 2015. He sold them for $ 11 each on 23 May 2019.
2. Daniel's Cost base of rental property for CGT purpose =
Purchase price + Stamp Duty + Legal fees to transfer title to him + Extension to main bedroom
= 4,00,000 + 3,500 + 1,300+ 14,000
= $ 4,18,800 (Option C)
3. Gifts are - Deductible, when they fall under the categories specified in ITAA. (Option C)
4. A tax payer can deduct from his/her assessable income any loss or outgoing to the extent - It is incurred in gaining or producing the person's assessable income (Option A)
