You work in the capital gains tax section of the tax division of an accounting firm. You had a meeting with your client, Brad Ferguson on 4 July 2021, who provided you with the following information.

Brad Ferguson sold his gift shop and family home in New South Wales and moved to Queensland on 21 June 2021. Brad had originally acquired the shop on 10 October 1992 for $450,000.

• He sold the shop on 20 May 2021 for a net consideration of $840,000 of this sum $120,000 was attributed to goodwill.
• Brad received a further $70,000 for signing a contract not to open another business within 10 km radius for the next five years.
• Brad sold his principal place of residence in NSW. He had acquired the house for 950,000 on 19 July 1998. The house sold on 10 June 2021 for $1,500,000. Estate agents and solicitors' costs associated with the sale were $31,000.
• Please answer the question according to the Taxation in Australia.

Prepare a letter of advice explaining to Brad of the tax consequences regarding the abovementioned transactions. Your letter should include calculations of Brad’s estimated capital gain.

Answer rating: 100% (QA)

The capital gains tax is a levy on the profit from an investment that is incurred when the investment is sold When stock shares or any other taxable assets are sold the capital gains or profits are re... View the full answer