Troy Simmons is 35 years old and has decided to sell off some off his assets.

E-bike

Troy's parents gave him jet ski for his 33^rd birthday (24 July 2021). This cost his parents $12,000. Troy enjoyed having the jet ski, but he decided to sell it. Troy sold the jet ski on Facebook marketplace on 3 May 2023 for $16,000.

Shares

Troy purchased 100,000 shares in Bega Limited on 14 October 2001 for 90 cents each. On 5 May 2022 there was a dividend declared of $100 and Troy elected to a dividend re-investment receiving additional 100 shares (@$1 each). Troy then sold all 100,100 shares on the 14 October 2022 for $1.10 each.

House

Troy owns a house in Toowoomba as Joint Tenants with his partner Peta. They purchased the house on 3^rd of May 2015 for $75,000. At that time, they had to pay solicitor's fees of $1,500 (inc GST) and stamp duty of $13,300. For the first five years (3 May 2015 to 3 May 2020) they did not live in the house and instead rented it out (as they were both working at a remote mine site and lived in accommodation provided by the mine company). Due to Covid-19 they moved into the house on the 4 May 2020 and lived in it as their home until they sold it. They signed a contract for sale on the 4 May 2023 and the house settled on the 4 July 2023. They sold the house for $530,000. They had to pay solicitor's fees of $900 (inc GST), as well as an agent's commission of $5,600 (inc GST). Also, they paid for house to be professionally furnished while being sold which cost $3,000 (inc GST). In September 2021 they spent $25,000 (inc GST) on getting a new kitchen put in with marble bench tops.

While the house was being rented they had paid Local Council Rates of a $300 per quarter, as well as total interest on a house loan of $5,000. From 4May 2020 to the date of sale, they paid rates of $2,400 and paid interest on the house loan of $2,300. Over the five years the house was rented, Troy and Peta received $10,000 pa in rent.

Coin collection

Troy sold a rare coin collection for $40,000 to an expert dealer on 2 December 2022. This coin collection Troy had inherited the coins from his deceased grandmother. His grandmother had originally bought the coin collection for $6,000 in May 1987, and at the date of her death (November 2013) they had a market value of $18,000.

Broadbeach holiday house

Troy owns a holiday house at Broadbeach as Tenants in Common: 1/3^rd each with his brother Jack, and sister Mary. They purchased the house in March 2010 for $155,000, and it is now worth $750,000. They sometimes let out the house on Air BnB when they are not using it (approximately $10,000 in rent per year all together). On the 29^th of June 2023 Troy received a contract for purchase (signed by Jenny Xu as purchaser) offering to buy the house over market price for $1,000,000. Neither Jack, Mary nor Troy have signed the contract as vendor as Jack wants $1.2m.

Other information to consider:

Troy is an Australian resident for tax purposes in the 2023 tax year. Last year (2021-2022) Troy:

• sold his Yaris car for a capital loss of $4,000;
• sold a painting for a capital loss of 8,000. He originally bought the painting for $15,000 five years ago;
• sold some Telstra shares for a capital loss of $3,000. He originally bought the shares two years ago for $9,000.
• Troy did not have any capital gains in the 2022 tax year.

Required:

1. This must be completed in ILAC format. Marks will be allocated for issue, law and application, conclusion. If you miss any part of that format, you will not be eligible for the marks for the part that is missing. PLEASE NOTE: Step 1, 2, 3 and 5 for each asset should be completed similar to what is used in the workshops for this course i.e. law and application were combined together.
   1. Determine whether Troy has made an initial capital gain or loss for each asset sold.
   2. Determine whether Troy is entitled to use the discount method.
   3. Calculated Troy's net capital gain for the 2023 tax year.

Ensure that you discuss any other relevant information relating to Troy's net capital gain. Ensure that you justify your application with the relevant law. In text referencing of the law is all that is necessary. For case law, the names of the parties is sufficient. For legislation, the section, subsection (and if relevant the item number) is sufficient. (12 marks)

1. No law is required in this part of the assessment. You need to conduct your own research and provide a discussion that addresses the questions you are asked.
   1. Do you think the CGT discount of 50% is a good tax policy? Justify your answer by considering that factors that make up 'Good Tax Design and Policy'. As part of this consider the marginal tax rates and what the 50% discount means for a progressive tax system. (3 marks)