Question
Charlie owns a block of three hectares of land in Yarra Valley on which a house is situated. That property was purchased in 1990 for $250,000 for the land and $300,000 for the house. He moved into the property as his main residence as soon as practicable. He lived there until 1997 before he migrated to Canada. At that time the land is worth $350,000 and house is worth $270,000.
In 2000, Charlie bought a house in Canada where he resided. He continued to rent out his property in the Yarra Valley before it was sold in 2015. The property was sold for $800,000, being land of $450,000 and house $350,000.
Required
Advise Charlie on his tax implications relating to the Yarra Valley property.
You are required to cite the relevant legislation and case law.
Rationale
This assessment task covers Topics 1 to 9 and has been designed to ensure that you are engaging with the subject content on a regular basis.
This assignment has been designed to assess your ability to
• be able to identify and explain the rules of law relating to taxation law topics covered in the subject
• be able demonstrate a capacity to engage in legal research
• be able to use legal research skills to apply the law to legal problems relating to taxation so as to reach a solution
• be able to analyse legal rules so as to differentiate between possible outcomes to the legal issues arising from novel fact situations.