Jovanna aged 65 years lived in a rental in Melbourne CBD and planned to retire at Port Fairy. However, she subsequently decided her ailing sister in Italy needed her help. Accordingly, Jovanna decided to sell everything other than some personal items like clothing and other non valuable items, which she kept at her Melbourne rental property. When she sold all her assets over a period of 9 months, she received in excess of $1.2m. Jovanna is unsure of her CGT obligations and wants to ensure she has attended to her taxation obligations before returning home. She is concerned she might have to include something in the order of more than a half a million dollars from all of her capital gains/losses. You have established the various assets sales having consulted Jovanna. REQUIRED Support your answers and calculations with the applicable legislation in regard to both parts of the question: Part 1 a) Why do the assets need to be considered under CGT?
b) Prior year capital losses - CGT impact? Jovanna advises her prior year capital losses are $5,000. What is the impact?
c) Family home disposal - CGT impact? Jovanna's family home at Bundoora sold at auction for $1,200,000 on 1 June 2021, and settlement was on 10 July 2021. Purchase of the home was on 11 March 1988 for a cost of $250,000. Stamp duty, legal fees, conveyancing and transfer fees and borrowing expenses amounted to $15,000. Selling costs of $30,000 included commission, legal fees and conveyancing. Renovations and extensions carried out in June 2000 amounted to $160,000. d) Sale of Motorcycle CGT impact ? She purchased her motorcycle for $9,000 on 1 July 2020 and sold it on 30 June 2021 for $20,000 e) Sale/donation of non-antique furniture and household items - CGT impact? Just before Jovanna left her home to go to the temporary rental accommodation, Jovanna sold household furniture and household effects (which were not antique) for $15,000 to a 2nd hand merchant. What items Jovanna couldn't sell she donated to the Salvation Army. f) Port Fairy land sale for intended retirement home - CGT impact? Jovanna received the capital proceeds for the vacant land at Port Fairy in August 2021 for $620,000, but had entered into the contract on 1 June 2021. The block of land was originally purchased to build her retirement home, but given her recent change in plans needed to be sold. The land was purchased on 1 July 2020 for $500,000 and acquisition costs amounted to $20,000. Selling costs of $30,000 included commission and legal fees and conveyancing fees. Other costs included council rates, water rates and interest totalling $20,000
g) Sale of Telstra shares - CGT impact You established at the interview that the Telstra shares resulted in a $50,000 discount capital gain. (NB Included in Part 2 - the gain is already calculated, 0 mark allocation in Part 1- This is for information only, no need to write anything below, just dont forget to include the $50,000 discount capital gain in Part 2) Part 2 Based on Part 1, Calculate the net capital gain (or loss) Jovanna must include in her income tax return for 2020-21.