INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 1 - Preliminary  

Subdivision A - Object, simplified outline, example and index  

SECTION 160AZ   EXAMPLE OF HOW THIS PART WORKS  

160AZ(1)   Typical example.  

This section sets out an example of how this Part will work in a typical case involving the acquisition and disposal of an asset by a taxpayer. The taxpayer acquired the asset on 29 September 1985 for a cost of $100,000 and disposed of the asset on 29 September 1991 for $300,000. The cost base is $100,000. The indexed cost base is calculated as follows:

$149,600 indexed   cost base

=

$100,000 (cost base)

×

215.7 (index number for                     September 1991 quarter) 144.2 (index number for                     September 1985 quarter)

(The fraction on the right is rounded up to 1.496.)

160AZ(2)   Capital gain on disposal.  

There is a capital gain on disposal of the asset.

160AZ(3)   Calculation of net capital gain.  

Assuming that the taxpayer has no capital losses, the net capital gain is $150,400.

160AZ(4)   Inclusion of net capital gain in assessable income under section 160ZO.  

The taxpayer's assessable income includes $150,400.