MLC301 Principles of Income Tax Law - Assessment Questions

QUESTION 3. 12

Consider the following situations and discuss their effect on assessable income, if any. Note: Where no dates are given, the current tax year is to be assumed. The taxpayer lives and works in Warrnambool but she has been offered a promotion in her job which requires moving to Sydney. As a result of the move and the need to raise money for the higher cost of housing in Sydney, she sells the following items:
• Her Warrnambool home for $435 000 (3 October) which she purchased for $85 000 (24 May 1996). This house was sold before she purchased a home in Sydney.
• A leather lounge suite that was too large to move to Sydney was sold for $10 100 (2 December). This lounge had been purchased for $6000 (21 April 2010).
• An old dining table that she had purchased at a garage sale for $560 (16 July 2011) and spent considerable time restoring. However, as she received a lot of interest in the sale of the table, she decided to ask an antique dealer what its value was. The antique dealer valued it at $4000 and she sold it for $3700 (19 November).
• A diamond ring which she was given by her previous husband (1 January 1997 – market value $800) was sold for $300 (12 November).
• A large fridge/freezer which she had only purchased a few months ago (8 September) for $1500 was sold for $800 (1 December).