Question 1 You are required to just calculate Joe Smyth's quot; net capital gainquot; for the 2016/17 income year.

Question 1

You are required to just calculate Joe Smyth's "net capital gain" for the 2016/17 income year. Assume Joe is not entitled to use any of the small business concessions in Division 152 ITAA 1997.

In addition the transactions listed below, Joe also received salary income of $120,000 in the 2016/17 and an unfranked divided of $3,000 from BHP shares Joe also has carried forward capital losses from:

·        the sale of Optus Shares of $2,000, and

·        the sale of an antique clock of $1,800

As we determined in Seminar #7 Joe had the following capital gains and/or losses (prior to considering any capital losses, indexation method or discount method

·        Initial capital loss of $11,700 on Plasma TV (acquired 3 March 2014; disposed 12 June 2017);

·        Initial exempt capital gain of $450 on Sculpture (acquired 19 May 1990; disposed 12 June 2017);

·        Initial capital gain of $580 on Rare Book (acquired 5 April 2003; disposed 12 June 2017); and

·        Initial capital gain of $7,000 on Investment Apartment (acquired 25 September 2005; disposed 12 May 2017)

·        Initial capital gain of $380,000 on Google Shares (acquired 10 November 2015; disposed 3 January 2017).

Parkview Property

Joe signed the contract to purchase A 0.2 hectare property at 26 Hope Street at Parkview on the Gold Coast on 22 March 2003 for $310,000. Ownership transferred to him on 23 April 2003. Joe has lived in Parkview Property as his home from the 23rd of April 2003 until to 25 October 2012.

On 26 October 2012, he decided that he and his family might enjoy a change. So he and his family moved out of the Parkview Property and instead moved into a beachfront house at Broadbeach which they just rented. From the 26 October 2012 the Parkview Property was rented out to tenants and Joe received approximately $15,000 a year in rent.

Joe later placed the Parkview Property on the market and sold his Parkview Property for $597,000 under a contract dated 26 June 2017. In relation to the sale, he paid a $15,800 commission to the real estate agent and $2,300 in legal fees to his lawyer. The ownership of the Parkview Property transferred to the new owner on 28 July 2017.

Logan Property

On 23 May 1985 Joe Smyth purchased a block of land for $35,000 in Logan on which to build a house. After receiving many quotations, Joe signed a contract on 18 June 1987 with Rapid Builders Ltd to construct the house. The house was constructed and completed in the September 1987 quarter at a cost of $65,000. 

Instead of moving into the house, Joe rented it out to tenants. He continued to doing this until he eventually sold the residential property for $640,000 under a contract dated 10 June 2017 with the ownership transferring on 14 July 2017. An independent valuation revealed that the land was worth $500,000 at the time of sale. (Hint! Could the house be considered as separate asset to the land?)

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Group 1