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In 1982, Billy Jones purchased eight hectares of land for a strawberry farm at the cost of $320,000. By 1989, another two hectares of land was brought for $40,000. The cost included a stamp duty of $800 and legal fees of $1600. However, due to crop failure, Billy decided to sell his land. Since he could not find a buyer who would buy his whole property, he decided to sell the land by sub-division. He had to spend an additional amount of $160,000 on sub-division. He finally sold the land in July 2011 for $700,000. The contract provided that half of the money would be payable after settlement and the remaining on March 31, 2012. The outstanding balance would accrue at the interest of 10 per cent per annum. The agent's commission would be $12,000, and legal fees would be $2,400. Give Billy's tax advice for the financial year of 2011-12.
Cost of land: $40,000
Stamp Duty: $800
Legal Fees: $1600
Sub-division expenses and cost of disposal: $160,000
Agent’s commission: $12,000
Legal fee: $2400.
Total: $174,400.
Out of these, 20 per cent is applicable to the taxable area of land, so a total of $77,280 is calculated as a cost base.
Next, we need to determine capital gains. Capital gains refer to the excess of the sale value over the cost base.
Sale value: (20 percent of $700,000) = $140,000
Cost base: $77,280
Capital gains: Sale value – cost base = $62,720
However, since Billy has held the new block of land for more than a year, he can discount 50 per cent of the capital gains. So the actual capital gains would be 50 per cent of $62,720 = $31,360.
Besides capital gains, there is another source of income that is taxable. Billy had entered into a sale agreement on the condition that the settlement of the money would be made on October 12, 2011, the date on which the sale deed would become effective. The outstanding balance would attract an interest of 10 per cent p.a. The interest amount received on such a transaction must be shown under the other income of Billy.
Total amount of sale = $700,000
1st installment = $350,000 dollars
2nd installment = $350,000 dollars which attracts an interest of 10 percent p.a. for a period of 5 months 19 days.
Amount taxable = $16,440
Total number of days which accrues interest = $171
Total number of days in a year = $365
So taxable interest = 35,000/365 x 171 = $16,400.
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If you are given a choice, choose a topic first. It shouldn’t be too narrow or too broad for you to manage. Surf through different online/ offline sources to find a suitable topic.
Researching is a fluid term, and technically you are doing that before you have picked the topic. Continue researching important aspects coming up every day on both online and offline sources. If you find it difficult, trust our examples and contract law assignment samples.
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Ans: Woking on a complicated law essay may turn out to be too overwhelming for you. This could be because you have confusion on how to present each section of your essay. To eliminate this confusion, you need to focus on the following steps properly.
Ans: If you’re feeling puzzled about working on your complex law assignment, then you need to remember a few simple steps. Once you understand how these steps are carried out, you won’t have problems starting with your law paper. These steps are as follows.
Ans: The conclusion of your law paper is as significant as the introduction. So, you must make sure the concluding section comes across as flawless. You have to sum up the major details briefly and also mention the outcome of your research. You can also consider highlighting the scope of further research on your specific topic.
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Students should follow these steps to write a law assignment –
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