On 1 April 1987, Samuel Neilson purchased 2,000 shares (CGT Asset) in Commonwealth Bank for $4.25 per share. On 1 June 1993, she also purchased 1,000 shares in ANZ Bank at a cost of $14 per share. In order to purchase an investment property, Samuel sold some of her shares on 2 December 2019 at the following prices:

1,000 Commonwealth Bank $8.00 per share

500 ANZ Bank $13.00 per share

250 ANZ Bank $12.00 per share

Required:

Critically analyze the capital gain tax raised from the above situation and provide a detailed analysis to Samuel Neilson (Australian resident) by showing the full calculations and explanation of any gain or loss that he has incurred from the transactions.

Your analysis must include the following points:

(a) Which CGT event did occur from this event and timing of the CGT event? 

(b) Calculate capital gain/loss using both the indexation and discount methods. 

(c) Choose a suitable method to calculate capital gain and support your option with an explanation.

Answer rating: 100% (QA)

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