Teaching Note 4 - The Taxation System

FNCE20001 Business Finance Semester 2, 2015

Teaching Note 4: An Introduction to the Taxation System in Australia 1

Department of Finance FNCE20001 Business Finance

Teaching Note 4 An Introduction to the Taxation System in Australia*

Asjeet S. Lamba, Ph.D., CFA Associate Professor of Finance

Department of Finance Faculty of Business and Economics

University of Melbourne, Victoria 3010 [email protected]

Outline 1. An introduction to personal and capital gains taxes in Australia 2 1.1. Personal taxes 1.2. Capital gains taxes 2. Taxation of dividends under a classical tax system 8 3. Taxation of dividends under the imputation system 9 4. Suggested answers to practice problems 13 5. References and further reading 14

* This teaching note has been prepared for use by students enrolled in FNCE20001 Business Finance. This

material is copyrighted by Asjeet S. Lamba and reproduced under license by the University of Melbourne (© 2000-12). This document was last revised in July 2015 by Vincent Grégoire. Please email me if you find any typos or errors.



This teaching note provides an introduction to the taxation system in Australia. Section 1 provides an introduction to the currently prevailing personal and capital gains tax systems in Australia, while sections 2 and 3 examine the taxation of dividends under the classical and imputation tax systems, respectively. Note that the focus of section 1 of this teaching note is on individuals who are Australian residents. Different rules apply to non-residents, Australian corporations and other resident entities which are not covered in this teaching note. At the end of this note you should be able to: !! Compute the personal taxes for individuals using the appropriate tax rate regime !! Compute the capital gains taxes for individuals using the method appropriate for the type of

capital gain realized !! Examine the taxation of dividends under a classical tax system and its implications for

corporations and individual shareholders !! Examine the taxation of dividends under the imputation tax system and its implications for

corporations and individual shareholders 1. An Introduction to Personal and Capital Gains Taxes in Australia 1.1. Personal taxes In Australia, while corporations are taxed at a flat rate of 30%, individuals are taxed on a progressive basis with the tax rate increasing with income levels. For individuals, the tax year spans the period of July 1 through June 30 of the following year. The 2015-16 tax rate schedule for individuals is given the following table.1 Table 1: Personal Income Tax Rates: 2015-16*

Taxable Income Taxes Payable $0 – $18,200 $0 $18,201 – $37,000 19¢ for each $1 over $18,200 $37,001 – $80,000 $3,572 + 32.5¢ for each $1 over $37,000 $80,001 – $180,000 $17,547 + 37¢ for each $1 over $80,000 $180,001 and over $54,547 + 45¢ for each $1 over $180,000

* Source: Australian Tax Office, 2015, www.ato.gov.au. The taxes paid by individuals are based on the taxable income which is equal to the individual’s assessable income minus any deductions. Assessable income includes items such as salary and wages, investment income, realized capital gains, etc while typical deductions include those related to work, managing investments, etc. The following example illustrates how taxes are computed for individuals. Example 1: Personal taxes Josephine King, your second best friend, has asked you for some help with her taxes for the current tax year. You have figured out her taxable income for the year to be $95,000. Ignoring the Medicare levy, compute Jo’s tax liability using the appropriate tax schedule given above. What are her average and marginal tax rates and how are these related to each other?

1 Note that the Medicare levy applies to certain thresholds and the Temporary Budget Repair Levy is payable at a

rate of 2% for taxable incomes over $180,000. These issues are ignored in the examples in this teaching note.



Solution Based on the 2015-16 tax schedule, Jo’s taxable income lies in the $80,001 – $180,000 range. So, on the first $80,000 Jo’s tax liability is $17,547 and on the remaining $15,000 she will pay taxes at 37%. That is: Tax payable on $80,000 = $17,547. Tax payable on remaining $15,000 = 0.37(15000) = $5,550. Total tax payable = 17547 + 5550 = $23,097. Note that the marginal tax rate is the tax rate applicable to the last dollar of taxable income and will be higher than the average tax rate. Average tax rate = 23097/95000 = 24.3%. Marginal tax rate = 37.0%. 1.2. Capital gains taxes For individuals, a capital gains tax (CGT) is the tax paid on the net capital gains realized in a particular tax year.2 A net capital gain is defined as the total capital gain realized during the tax year minus the total capital loss realized in that year and any unapplied net capital losses from earlier years. Note that if an individual’s total capital loss in a tax year is more than the total capital gain, the difference is a net capital loss for that tax year. Such a loss can be carried forward to future years where it can be deducted against future, realized capital gains. In other words, one cannot deduct capital losses (or a net capital loss) from taxable income. There is also no time restriction on how long one can carry forward a net capital loss. Typically, a capital gain or loss is realized if a CGT event occurs. As shown in the examples below, for most CGT events an individual’s capital gain is the difference between the total capital proceeds and the cost base of the asset on which the capital gain is realized. Conversely, an individual makes a capital loss if the reduced cost base of the asset is greater than the total capital proceeds. Note that as the capital gains tax regime was introduced on September 20, 1985 any realized capital gain or capital loss on an asset acquired before September 20, 1985 is disregarded, and no capital gains taxes are payable on such asset sales. There are three methods that can be used to calculate the capital gain on an asset, which are: !! The “other” method !! The indexation method !! The discount method Each of these methods is described below, starting with the simplest one, the “other” method. 1.2.1. The “other” method

2 Different rules apply to corporations and other entities and these are not covered here. For details on this see

Guide to capital gains tax 2014-15, Australian Tax Office.



This method is used to calculate the capital gain if an asset has been purchased and sold within 12 months. In such cases, the indexation and discount methods do not apply. The method is simple to use as it involves subtracting the asset’s cost base from the capital proceeds received upon its sale, as illustrated in the following example. Example 2: Calculating capital gains using the “other” method Your friend purchased a property for $200,000 on November 20, 2014. He paid a stamp duty of $5,000 on December 10, 2014 and his solicitor’s fees of $2,000 a week later. He sold the property on April 10, 2015 for $250,000 on which he incurred costs of $2,000 in solicitor’s fees and $4,000 in agent’s commission. Compute your friend’s capital gain on the sale of the property. Solution Since your friend bought and sold the property within 12 months he must use the “other” method to calculate the capital gain. His total cost base is as follows. Cost of property $200,000 Stamp duty on purchase of property $5,000 Solicitor’s fees for purchase of property $2,000 Solicitor’s fees for sale of property $2,000 Agent’s commission on sale of property $4,000 Total cost base $213,000

The capital gain on the sale of the property is as follows. Capital proceeds $250,000 Less Cost base $213,000 Capital gain $37,000

1.2.2. The indexation method For individuals, the indexation method is used to compute the capital gain under the following conditions: !! A CGT event occurred to an asset acquired before September 21, 1999, and !! The asset was owned for 12 months or more. Under this method, the cost base of the asset is increased by an indexation factor where the indexation factor is computed using the relevant consumer price index (CPI) shown in the following table. Table 3: Consumer Price Index for the Indexation Method*

Quarter ending

Year 31 March 30 June 30 Sept. 31 Dec. 1999 67.8 68.1 68.7 N/A** 1998 67.0 67.4 67.5 67.8 1997 67.1 66.9 66.6 66.8



1996 66.2 66.7 66.9 67.0 1995 63.8 64.7 65.5 66.0 1994 61.5 61.9 62.3 62.8 1993 60.6 60.8 61.1 61.2 1992 59.9 59.7 59.8 60.1 1991 58.9 59.0 59.3 59.9 1990 56.2 57.1 57.5 59.0 1989 51.7 53.0 54.2 55.2 1988 48.4 49.3 50.2 51.2 1987 45.3 46.0 46.8 47.6 1986 41.4 42.1 43.2 44.4 1985 -- -- 39.7 40.5

* Source: Australian Tax Office, 2015, https://www.ato.gov.au/Rates/Consumer-price-index/. ** If the indexation method is used to calculate the capital gains the indexation factor is based on increases in the CPI up to September 1999 only as indexation was frozen on September 30, 1999. If the CGT event occurred before September 21, 1999, the indexation factor used is:

CPI for quarter when CGT event occurredCPI for quarter in which expenditure was incurred

Indexation Factor = .

Clearly, the higher this factor (that is, the higher the inflation adjustment required) the higher the cost base and the lower the net capital gain. The indexation of the asset cost base was frozen on September 21, 1999. So, for CGT events on or after September 21, 1999, the indexation factor is the CPI for the September 1999 quarter (which is 68.7), divided by the CPI for the quarter in which you incurred costs relating to the asset, and rounded to three decimal places. That is, the indexation factor for CGT events on or after September 21, 1999 is:

!"#$%&'()"*+&,')- =

CPI*for*quarter*ending*Sep*30, *1999*(= 68.7)

CPI*for*quarter*in*which*expenditure*was*incurred

1.2.3. The discount method For individuals, the discount method is used to calculate the capital gain under the following conditions: !! The CGT event occurred on or after September 21, 1999, !! The asset was acquired at least 12 months before the CGT event, and !! The indexation method is not used to compute the capital gain. Note that in verifying whether an asset was acquired at least 12 months before the CGT event both the acquisition and CGT event days are excluded from the month count. Also note that for assets acquired after September 21, 1999 only the discount method can be used to compute the capital gain. Example 3: Choosing the indexation or discount method



You sold 1,000 shares of LMB Ltd in June 2015 for $25,000, which were purchased in February 1995 for $18,000. The acquisition cost included stamp duty and brokerage while there was no brokerage on the sale. You had no other capital gains or capital losses in 2014-15 and no net capital losses carried forward from previous years. Which method should you use to compute your capital gains? How does your answer change if the shares were purchased in February 1990? How does your answer change if the shares were purchased in February 1990 and if you had $2,500 in net capital losses carried forward from previous years? Solution Since you owned the shares for more than 12 months and they were purchased before September 21, 1999 you can use the indexation method or the discount method to compute your capital gains and choose the method that gives the best outcome. The calculations are as follows. Indexation method Discount method Capital proceeds from sale $25,000 $25,000 Less Cost base of shares $19,386* $18,000 Capital gain $5,614 $7,000 Less CGT discount (50%) -- $3,500 Net capital gain $5,614 $3,500

* Note that the indexation factor is 68.7/63.8 = 1.077. So, Acquisition cost × Indexation factor = $18,000 × 1.077 = $19,386. As the discount method provides you with a lower capital gain this method would be used in this case. If the shares were purchased in February 1990 the indexation factor becomes: 68.7/56.2 = 1.222. The cost base of the shares under the indexation method is: 18000(1.222) = 21,996. Indexation method Discount method Capital proceeds from sale $25,000 $25,000 Less Cost base of shares $21,996* $18,000 Capital gain $3,004 $7,000 Less CGT discount (at 50%) -- $3,500 Net capital gain $3,004 $3,500

* Note that the indexation factor is 68.7/56.2 = 1.222. So, Acquisition cost × Indexation factor = $18,000 × 1.222 = $21,996. As the indexation method now provides you with a lower capital gain this method would be used in this case. This is because the inflation-adjusted cost base of the shares has risen substantially resulting in a lower net capital gain. The capital gain calculations with a $2,500 in net capital losses carried forward from previous years are as follows. Indexation method Discount method Capital proceeds from sale $25,000 $25,000 Less Cost base of shares $21,996* $18,000 Capital gain $3,004 $7,000



Less Capital losses from previous years $2,500 $2,500 Adjusted capital gain $504 $4,500 Less CGT discount (at 50%) -- $2,250 Net capital gain $504 $2,250

* Note that the indexation factor is 68.7/56.2 = 1.222. So, Acquisition cost × Indexation factor = $18,000 × 1.222 = $21,996. In this case you would use the indexation method as well because it minimizes the net capital gain.3 The following table summarizes the three methods used to compute capital gains and the differences across the three methods. In choosing between using the indexation and discount methods an individual will use the method that minimizes the capital gains, as illustrated in the example above. Table 4: Summary of Methods for Calculating Capital Gains* Indexation method Discount method “Other” method Description of method

Allows an individual to increase the cost base

by applying an indexation factor based

on CPI up to September 1999

Allows an individual to halve the capital gain

Simplest method of subtracting the cost base from capital

proceeds

When to use the method

Use for an asset owned for 12 months or more if it produces a better

result than the discount method. Use only for assets acquired before September 21, 1999

Use for an asset owned for 12 months or more if it produces a better

result than the indexation method

Use when an asset is purchased and sold

within 12 months (that is, when the indexation and discount methods

do not apply)

How to calculate capital gains

Apply the relevant indexation factor then subtract the indexed cost base from the capital proceeds (see

example 3 above)

Subtract the cost base from the capital

proceeds, deduct any capital losses, then

reduce by the relevant discount percentage (see

example 3 above)

Subtract the cost base from the capital

proceeds (see example 2 above)

* Source: Adapted from Personal Investors Guide to Capital Gains Tax 2012, Australian Tax Office, Table 1. 2. Taxation of Dividends Under a Classical Tax System The “classical” tax system is a system under which dividends are paid to shareholders from the after-corporate-tax earnings of firms. Taxes on these dividends are then payable at the shareholder’s level via personal taxes. This system is in operation in several countries, including the US. It was the system that was applicable to taxpayers in Australia until 1987 when it was 3 Note that applying one method to compute the capital gains on a whole parcel of shares acquired before

September 1999 may not be the best option if there are capital losses from previous years. In such cases, an even better option may be to apply the indexation method to sufficient shares to absorb the capital loss and then apply the discount method to any remaining shares. Such situations are not covered in this teaching note.



replaced by the “imputation” system, which is discussed in the following section. Under the classical tax system earnings at the firm level are essentially taxed twice. First, at the firm level via corporate taxes on earnings and next at the shareholder level via personal taxes on dividends received. The following example illustrates the double taxation of earnings under the classical tax system. ABL Ltd had the following net income during 2014-15. Assume that it pays out all its after tax earnings as dividends to its shareholders.

Net operating income $2,000,000 Interest expense $400,000 Taxable income $1,600,000 Tax payable (at 30%) $480,000 Net income $1,120,000

You are an Australian resident who owns 1% of the shares of ABL which implies that you receive a dividend of $11,200 (= 0.01 × $1,120,000). Assume that your other taxable income is high enough to put you in the 45% marginal tax rate bracket.4 Your after-tax income related to this dividend would be as follows.

Dividend received $11,200 Tax payable on dividend (at 45%) $5,040 Dividend income after tax $6,160

Under the classical tax system your “share” of the total taxes paid by the firm is $4,800 (= 0.01 × $480,000) while at the personal level the total tax payable is $5,040. So, the effective tax rate under the classical tax system is: Effective tax rate = (4800 + 5040)/16000 = 61.5%. Note that the $16,000 in the above calculation is your “share” of the firm’s taxable income (= 0.01 × $1,600,000). 3. Taxation of Dividends Under the Imputation System In Australia, dividends paid to shareholders from earnings on which taxes have been paid at the corporate level are taxed under an “imputation” system. It is called an imputation system because the tax paid by a firm may be imputed (or attributed) to shareholders. The tax paid by the firm is allocated to shareholders via “franking credits” attached to the dividends paid. These franking credits can then be used by shareholders to fully (or partly) offset tax payable on the dividends. Thus, under the imputation system taxes paid at the firm and individual levels are treated in an integrated manner. A typical dividend payment statement is shown below. Figure 1: Example of a Dividend Statement

4 $180,000 may sound like a lot right now but remember that you’ll soon be a Melbourne Uni graduate and

reaching that income threshold won’t take too long!



Source: You and Your Shares 2015, Australian Tax Office, p. 6. In the above example, the shareholder has received an unfranked dividend of $200 and a franked dividend of $700. Unfranked dividends are taxed as part of the shareholder’s ordinary income while the franked dividend has associated with it an imputation (or franking) credit, which, in our example, is $300. This amount is computed using the following expression: Franking credit = Div[tc/(1 – tc)], where tc is the corporate tax rate, currently at 30%. In our example, the franking credit is: Franking credit = 700(0.3)/(1 – 0.3) = $300. For tax purposes this franking credit is considered both as (imputed) personal income and the tax already paid by the shareholder. Assuming that the shareholder has other taxable income which puts her in the 45% marginal tax bracket, the tax payable on the franked dividend is computed as follows:

Franked dividend received $700 Row 1 Franking credit1 $300 Row 2 Grossed-up dividend2 $1,000 Row 3 = Row 1 + Row 2 Tax liability (at 45%) $450 Row 4 = 0.45 × Row 3 Less Franking credit1 $300 Row 5 = Row 2 Tax payable on dividend $150 Row 6 = Row 4 – Row 5

1 Franking credit = Div[tc/(1 – tc)] = 700(0.3)/(1 – 0.3) = $300. 2 Grossed-up dividend = Div + Div[tc/(1 – tc)] = Div/(1 – tc) = 700/(1 – 0.3) = $1,000. We return to our example of ABL Ltd and now assume that the company pays all its after tax earnings as franked dividends to shareholders. Net operating income $2,000,000 Interest expense $400,000 Taxable income $1,600,000 Tax payable (at 30%) $480,000 Net income $1,120,000



As a shareholder you own 1% of the firm and receive $11,200 in franked dividends. Again, assume that your other taxable income is high enough to put you in the 45% marginal tax rate bracket. The tax payable on these dividends is computed as follows.

Dividend received $11,200 Row 1 Franking credit1 $4,800 Row 2 Grossed-up dividend2 $16,000 Row 3 = Row 1 + Row 2 Tax liability (at 45%) $7,200 Row 4 = 0.45 × Row 3 Less Franking credit1 $4,800 Row 5 = Row 2 Tax payable on dividend $2,400 Row 6 = Row 4 – Row 5

1 Franking credit = Div[tc/(1 – tc)] = 11200(0.3)/(1 – 0.3) = $4,800. 2 Grossed-up dividend = Div + Div[tc/(1 – tc)] = Div/(1 – tc) = 11200/(1 – 0.3) = $16,000. Under the imputation system your share of the total taxes paid by the firm is $4,800 (= 0.01 × $480,000) while at the personal level the total tax payable is $2,400. Thus, the effective tax rate under the imputation tax system is: Effective tax rate = (4800 + 2400)/16000 = 45%. Again, note that the $16,000 in the above calculation is your “share” of the firm’s taxable income (= 0.01 × $1,600,000). Now consider two other shareholders who are in the 30% and 15% marginal tax brackets, respectively and who receive the same franked dividend as you. The tax payable by the shareholder in the 30% marginal tax bracket is as follows.

Dividend received $11,200 Row 1 Franking credit1 $4,800 Row 2 Grossed-up dividend2 $16,000 Row 3 = Row 1 + Row 2 Tax liability (at 30%) $4,800 Row 4 = 0.30 × Row 3 Less Franking credit1 $4,800 Row 5 = Row 2 Tax payable on dividend $0 Row 6 = Row 4 – Row 5

1 Franking credit = Div[tc/(1 – tc)] = 11200(0.3)/(1 – 0.3) = $4,800. 2 Grossed-up dividend = Div + Div[tc/(1 – tc)] = Div/(1 – tc) = 11200/(1 – 0.3) = $16,000. This shareholder has no tax payable on the dividend and the effective tax rate for this shareholder is: Effective tax rate = (4800 + 0)/16000 = 30%. The implication is that if the shareholder’s marginal tax rate is equal to the corporate tax rate a fully franked dividend is effectively tax free to an Australian resident. Finally, consider the shareholder who is in the 15% marginal tax bracket whose tax payable is shown in the following table.

Dividend received $11,200 Row 1 Franking credit1 $4,800 Row 2 Grossed-up dividend2 $16,000 Row 3 = Row 1 + Row 2



Tax liability (at 15%) $2,400 Row 4 = 0.15 × Row 3 Less Franking credit1 $4,800 Row 5 = Row 2 Tax payable on dividend -$2,400 Row 6 = Row 4 – Row 5

1 Franking credit = Div[tc/(1 – tc)] = 11200(0.3)/(1 – 0.3) = $4,800. 2 Grossed-up dividend = Div + Div[tc/(1 – tc)] = Div/(1 – tc) = 11200/(1 – 0.3) = $16,000. This shareholder has a negative tax payable, or a tax refund forthcoming on this dividend. The effective tax rate for this shareholder is: Effective tax rate = (4800 – 2400)/16000 = 15%. The implication is that if the shareholder’s marginal tax rate is less than the corporate tax rate a fully franked dividend will result in excess tax credits which can be used to reduce the tax payable on other income, or refunded if it cannot be used. Overall, the above analysis shows that the imputation tax system eliminates the double taxation of corporate earnings where each shareholder’s franked dividend income is effectively taxed at that shareholder’s marginal personal tax rate.5 Practice Problem 1 Your friend’s income for the 2014-15 tax year was $80,000, excluding dividends and stock transactions. He received a fully franked dividend of $0.60 per share on his holding of 5,000 shares in ABC Ltd and an unfranked dividend of $0.10 per share on his holding of 8,000 shares in XYZ Ltd. During the year, he sold half of his holding of ABC’s shares for $6.60 per share. He had purchased these shares for $6.00 per share in December 2002. Using the tax table in this teaching note calculate his taxable income, tax liability and tax payable for 2014-15. What are his average and marginal tax rates? Show all your calculations. Practice Problem 2 Sienna Feld owns $500,000 in 10 percent bonds of Festivus Ltd as well as 20,000 of its ordinary shares. In the past year, Festivus Ltd paid the stipulated interest on its bonds and a dividend of $2.00 per share. The firm’s tax rate is 30 percent. Assume that Sienna’s other taxable income is high enough so that the interest and dividend are taxed at the highest marginal tax rate of 45%. Compute her taxable income, tax liability and tax payable on this interest and dividend income assuming that: (a) the dividend is unfranked and (b) the dividend is fully franked. How do your answers change if Sienna has no other taxable income? Show all your calculations.

5 Note that this analysis is based on the assumption that the firm pays all of its after tax earnings as dividends and

that the dividends paid are fully (or 100%) franked. If this is not the case, the overall effect may be different. Such cases are not considered in this teaching note.



4. Suggested answers to practice problems Practice Problem 1 The taxable income, tax liability and tax payable are as follows. Base income $80,000.00 Franked dividend 5000 × 0.60 $3,000.00 Franking credit1 3000 × [0.30/(1 – 0.30)] $1,285.71 Unfranked dividend 8000 × 0.10 $800.00 Capital gain taxable2 0.50 × 0.60 × 2500 $750.00 Taxable income $85,835.71 Tax liability3 17547 + 0.37 × (85835.71 – 80000.00) $19,706.21 Tax payable4 19706.21 – 1285.71 $18,420.50

1 Franking credit = Div[tc/(1 – tc)]. 2 The discount method is the one available for computing the taxable capital gain. 3 The tax liability is computed using the tax table in this teaching note. 4 Tax payable = Tax liability – Franking credit. Average tax rate = 18420.50/85835.71 = 21.5%. Marginal tax rate = 37.0%. Practice Problem 2 Assuming that Sienna has other taxable income so that the interest and dividends are taxed at the marginal rate of 45% we have the following tax payable. a) If the dividend is unfranked then the tax payable on the interest and dividends is as

follows.

Interest income 500000 × 0.10 $50,000.00 Dividend income 20000 × 2.00 $40,000.00 Taxable income $90,000.00 Tax payable 90000 × 0.45 $40,500.00

b) If the dividend is fully franked then the tax payable on the interest and dividends is as

follows.

Interest income 500000 × 0.10 $50,000.00 Dividend income 20000 × 2.00 $40,000.00 Franking credit1 40000 × 0.3/(1 − 0.3) $17,142.86 Taxable income $107,142.86 Tax liability 107142.86 × 0.45 $48,214.29 Tax payable2 48214.29 − 17142.86 $31,071.43

1 Franking credit = Div[tc/(1 – tc)]. 2 Tax payable = Tax liability – Franking credit.

Assuming that Sienna has no other taxable income we have to use the tax table to compute the tax payable, as shown below.



a) If the dividend is unfranked then the tax payable on the interest and dividends is as

follows. Note that the taxable income from the calculation in part (a) above is $90,000.

Taxable income $90,000.00 Tax liability on $80,0001 $17,550.00 Tax liability on remaining $10,0001 10000 × 0.37 $3,700.00 Tax payable $21,250.00

1 The tax liability is computed using the tax table for 2011-12. Note that $10,000 = 90000 – 80000.

b) If the dividend is fully franked then the tax payable on the interest and dividends is

calculated as follows. Note that the taxable income from the calculation in part (b) above is $107,142.86.

Taxable income $107,142.86 Tax liability on $80,0001 $17,550.00 Tax liability on remaining $27,142.861 27142.86 × 0.37 $10,042.86 Total tax liability 17550.00 + 10042.86 $27,592.86 Tax payable2 27592.86 − 17142.86 $10,450.00

1 The tax liability is computed using the tax table in this teaching note. Note that $27,142.86 = 107142.86 – 80000.00. 2 Tax payable = Tax liability – Franking credit.

5. References and further reading Australian Tax Office, Capital gains tax. Available at: https://www.ato.gov.au/General/Capital-gains-tax/ Australian Tax Office, 2015, You and Your Shares 2015. Available at: https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/You-and-your-shares-2015.pdf

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Teaching Note 4 - The Taxation System