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Question 5 regarding Taxation Doubts...Apr2012

J

jenil10

Member
In the 5th Question, tax structures of two countries were given, the taxation of Country B read Charge Capital gains on the value of the assets at the end of third year.
Some of the students have taken Capital gain on the value at the end of third year while some have calculated the capital gains tax on the difference between the value at the end of third year and start of the year.
I have adopted the latter approach as the capital gains refers to the gains in capital change from the time the asset is bought. Taxation on the value refers to wealth tax which is different to capital gain as per income tax.
Please advise on which alternative is right ?
Thanks
Regards
 
jenil10 said:
In the 5th Question, tax structures of two countries were given, the taxation of Country B read Charge Capital gains on the value of the assets at the end of third year.
Some of the students have taken Capital gain on the value at the end of third year while some have calculated the capital gains tax on the difference between the value at the end of third year and start of the year.
I have adopted the latter approach as the capital gains refers to the gains in capital change from the time the asset is bought. Taxation on the value refers to wealth tax which is different to capital gain as per income tax.
Please advise on which alternative is right ?
Thanks
Regards
Click to expand...

I took the view that it was a wealth tax given the way it was worded. I can't remember the exact wording but I thought that it read 15% of the value fo the assets at the end of year 3. My calcualtions worked out that the total tax paid was very similar but the proportions of incomce vs capital gains were much different, which I think leaded into the next part of the question about choosing the country to reside in. I think that using 15% of only the gain in capital over 3 years results in one clear winner, country B.

Hopefully credit will be given for both ways as I agree, it's ambigious
 
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