CIMA Exam CIMAPRA19-F01-1 Topic 3 Question 55 Discussion

EF purchased an asset on 1 September 20X4 for $800,000, exclusive of import duties of $30,000. EF is resident in country Y where indexation is allowed on purchase costs when the asset is disposed of.

EF sold the asset on 31 August 20X9 for $1,500,000 incurring transaction charges of $20,000. The indexation factor increased by 40% in the period from 1 September 20X4 to 31 August 20X9.

Capital gains are taxed at 30%.

What is the tax due on disposal of the asset?