Capital Gains tax and ACCA

seanog91

Hey guys,

I am studying for the tax exam for the ACCA this year and really could do with some pointers for the Capital Gains question. WOuld anyone know of a good website that explains the whole concept in ie: stupid terms???

I know what it is and why it happens but when I go to work through some of the calculations I am looking at my workings and they are no way near right. This is one I have been having a bother with:

(3) In October, Mark gifted a painting to his daughter. The painting had been purchased in May 1995 for €1,100.
Restoration work was carried out professionally to both the frame and the painting in June 1999 at a cost of
€800. The market value of the painting at the time of the gift was €2,800.


You have to work out the marginal relief but wy do you have to do this? I think it is because Mark is gifting the painting to the daughter is this correct?

masoodsarwar

this is basic CGT calculation so i suppose you are doing f6.
its 4 years since i have done it but i can give you some key points.

painting is non wasting asset called as chattles.

when it sold for a low value there is marginal relief being half of difference of sale proceed and 2580.

base cost is 1000 and u apply indexation to that.
enhancement is 800 and again u apply indexation.

deduct these costs from sale proceed (market value of the painting)

this is gain. Apply CGT tax rate (30%) i think.

max tax will be difference between (2800-2580)* 30% which 66.

whatever tax u have calculated before is taxable gain. reduce it to 66 if it is more than 66. and the amount by which u reduce it is called marginal relief.

seanog91

masoodsarwar wrote: »

this is basic CGT calculation so i suppose you are doing f6.
its 4 years since i have done it but i can give you some key points.

painting is non wasting asset called as chattles.

when it sold for a low value there is marginal relief being half of difference of sale proceed and 2580.

base cost is 1000 and u apply indexation to that.
enhancement is 800 and again u apply indexation.

deduct these costs from sale proceed (market value of the painting)

this is gain. Apply CGT tax rate (30%) i think.


max tax will be difference between (2800-2580)* 30% which 66.

whatever tax u have calculated before is taxable gain. reduce it to 66 if it is more than 66. and the amount by which u reduce it is called marginal relief.

Thank you so much. You helped me a lot. Yes it is F6 and to be honest I do not like it There is so much to learn

optimistic_

masoodsarwar wrote: »

this is basic CGT calculation so i suppose you are doing f6.
its 4 years since i have done it but i can give you some key points.

painting is non wasting asset called as chattles.

when it sold for a low value there is marginal relief being half of difference of sale proceed and 2580.

base cost is 1000 and u apply indexation to that.
enhancement is 800 and again u apply indexation.

deduct these costs from sale proceed (market value of the painting)

this is gain. Apply CGT tax rate (30%) i think.

max tax will be difference between (2800-2580)* 30% which 66.

whatever tax u have calculated before is taxable gain. reduce it to 66 if it is more than 66. and the amount by which u reduce it is called marginal relief.

I could be wrong but I think it's 2540 for 2011 tax year. Tax rate is also 25% for the tax year 2011.

OP The indexation tables and all tables for motor allowances, tax credits etc for the current sitting are available on the acca website. An exact copy of what you will be given and will need to work from for the exam so you should get this for yourself to become familiar with it.

Are you self studying? If so, fair play. There is a lot to learn alright. Don't forget if you look at past papers the answers will differ to what you get as you will be using 2011 figures and rates

It's a while off yet. You'll be fine by the time the exam comes around.