Rofield Pty Ltd and Rhonda Darbershire - treatment of CGT events before and after the CGT date in Australia.

Essay by lucky_taranUniversity, Bachelor'sB+, December 2006

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The case gives rise to a number of issues concerning the tax for the sales of the asset. Roberta was the major shareholder of Rofield Pty Ltd, which was the ultimate owner of each of the other companies, through which Roberta ran business. Games R Fun Pty Ltd, which was established in 1982, was one of the first businesses Roberta started and in 1984 a land was bought for $20,000 on which mini golf game was built on. In 2005, Games R Fun Pty Ltd was sold to John and Rhonda Darbershire for $5 million and the land on which the mini golf game stood was valued at $2 million in the books of Games R Fun Pty Ltd. But as the land was acquired before 20 September 1985, Rofield Pty Ltd will not be taxed for the sale of the land, as the CGT provisions generally only apply to assets acquired on or after 20 September 1985 as under s104-10(5)(a), a capital gain or capital loss you make is disregarded if you acquired the asset before 20 September 1985 .

Clearly, the land was purchased by Games R Fun before 20 September 1985 and therefore, the disposal of land will not attract the operation of the capital gains tax provisions as the position before 20 September 1985, in general, was that capital gains were not taxed and capital losses were not allowed as deductions. So, Rofield Pty Ltd will be exempted by the CGT. The CGT legislation applies only to the disposal of a CGT asset acquired on or after 20 September 1985 and has no impact on the disposal of an asset acquired before 20 September 1985, no matter how long after 20 September 1985 the disposal may take place. The other issue concerning Game...