April 2012 - Q5.ii

Discussion in 'SP5' started by dsherratt13, Sep 6, 2013.

  1. dsherratt13

    dsherratt13 Member

    I can't get to the Examiners answer for the capital gains tax for country B. I'm sure I'm missing something obvious but the answer given of 1,968,750 with no explanation has left me flummoxed.

    If anyone could explain how this answer is arrived at I'd be greatly appreciative.

    Thanks
     
    dsherratt13, Sep 6, 2013
    #1
  2. Simon James

    Simon James ActEd Tutor Staff Member

    Just a clue to see if it helps: 15% x (13500 - 375)
     
    Simon James, Sep 9, 2013
    #2
  3. dsherratt13

    dsherratt13 Member

    I get that 13,500 is the value at the end of year 3 but I don't see why 375 should be in it?

    Everything has appreciated over the 3 years so there isn't a deduction to be made, unless you count depreciations yearly and save up the allowance to the end of year three?
     
    dsherratt13, Sep 11, 2013
    #3
  4. Simon James

    Simon James ActEd Tutor Staff Member

    375 is the depreciation allowance for the cars (even though they are appreciating!)

    "Depreciating assets (includes automobiles) can offset 25% of value from any tax payable"
     
    Simon James, Sep 11, 2013
    #4
  5. r_v.s

    r_v.s Member

    Would you pls explain the calculation for yr 3, country A??
     
    r_v.s, Sep 14, 2014
    #5
  6. Simon James

    Simon James ActEd Tutor Staff Member

    Income tax \( =50\% * 500=250 \)

    Capital gains tax \( =30\% * (1,500-1,200)-20\% * (5,000-4,500+6,000-5,000) =-210 \)


    CGT has already been paid on the art collection in previous years so no more tax is liable when it is sold.
     
    Last edited: Sep 17, 2014
    Simon James, Sep 17, 2014
    #6
  7. r_v.s

    r_v.s Member

    thank you!
     
    r_v.s, Sep 17, 2014
    #7

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