CGT and FBT — Questions
Attempt these without opening the answer page. Write the exact provision/event, then explain why it applies.
Question 1 — CGT event identification
A business asset is destroyed in a fire and the insurer later pays compensation. Explain the CGT event that should be tested first, the timing issue and why insurance proceeds matter.
Question 2 — Cancellation of rights
A company receives consideration for surrendering a valuable contractual right. Identify the CGT event and explain why this is not automatically an A1 disposal analysis.
Question 3 — Creating a restrictive covenant
A business owner receives $80,000 for promising not to compete in a defined area for three years. Identify the CGT event that must be considered and explain the key issue.
Question 4 — Options
A landowner grants a purchaser an option to acquire commercial land. Explain how the grant and later exercise of the option should be analysed.
Question 5 — Lease variation
A lessor pays a lessee to accept a change to an existing commercial lease. Which lease CGT event is potentially relevant and why does the identity of the payer matter?
Question 6 — Forfeited deposit
A purchaser defaults under a commercial property contract and the vendor retains the deposit. Which CGT event should be tested?
Question 7 — Division 122 rollover
An individual wants to transfer a business asset to a newly incorporated company that the individual will wholly own. Set out the statutory questions that must be checked before assuming rollover relief.
Question 8 — FBT definition
An employer pays an employee's private health insurance premium. Work through the threshold questions before calculating FBT.
Question 9 — Minor benefit exemption
An employer provides an employee with an infrequent benefit worth $220. Is the fact that it is under $300 enough to conclude the benefit is exempt? Explain.
Question 10 — Type 1 / Type 2
Explain why GST input tax credit entitlement matters when determining whether a fringe benefit is Type 1 or Type 2.
Question 11 — Otherwise deductible rule
Explain the otherwise-deductible rule and why income-tax deductibility under s 8-1 may decide the FBT result.
Question 12 — John Holland and Bechtel
Explain what students should learn from the different outcomes in John Holland and Bechtel rather than memorising a simple rule about FIFO travel.