QUESTION 2 CGT Calculation (12 Marks)

On 12 December 1998, Jack purchased 1000 shares in ABC Ltd for $1,400 and 1000 shares in XYZ Ltd for $20,000 with the intention to hold them as an investment for long-term growth. At the same time Jack also purchased an investment property for $250,000 and a boat for $12,000.

On 15 August 2017, Jack sold the shares in ABC Ltd for $400 to a friend. The market value of the shares at the time was $500. At the same time, Jack sold the boat for $9,000 and the investment property for $420,000. The legal costs in relation to the sale of the investment property were $2,000. Total depreciation and insurance costs incurred in relation to the investment property were $50,000. The water and sewerage rates were $12,000 and land tax was $30,000.

As at 30 June 2018, the shares in XYZ Ltd had risen to $65,000. Jacks only other income in the year ended 30 June 2018 was his salary of $120,000 and rent of $10,000 from the investment property.

On 20 December 2018, Jack sold the XYZ shares for $68,000. Jacks income for year ended 30 June 2019 was a salary of $130,000.

In July 2017, Jack sold the house in which he and his wife lived in for $540,000. He had originally bought the house in December 2013 for $590,000.

What is Jacks tax liability for each of the tax periods in which the above transactions occur?

Your answer must be supported by references to relevant legislation, case law and/or tax rulings (if any)