LAW6001 Taxation Law Case Study

Question 4 (20 marks)

Harrison Carter, an Australian resident, seeks advice on the CGT consequences of the following events.
1. He exchanged contracts for the acquisition of an investment property, at market value, on 24 January 1999, paying a 10% deposit of $80,000. Property settlement was deferred until 5 December 2001, when the balance of $720,000 was paid, title transferred, and his name was recorded as the registered proprietor. At the time of settlement the market value of the property was $1m. He sold the property on 14 June 2018 for $1.3m.
2. He acquired 10,000 shares in Star Entertainment Ltd in October 1985, paying $4 per share. He decided to sell his entire shareholding, for $12 per share, and signed a share transfer document and handed the transfer and share script to the Stock Exchange on 20 June 2018. The transfer was not registered with Star Entertainment Ltd until 10 July 2018.
3. He incurred a capital loss in 2018/19 amounting to $65,000.

Required:

Advise net capital gains (losses) to be included in Harrison Carter’s tax return for the years ending 2018 and 2019. Include ALL available methods for calculating a capital gain for both years. You must explain the timing of a CGT event with relevant section numbers and cases.