Lecture 6

Question 1

NEW UPDATED VERSION
1. Indexation allowance ( inflation)
2. What is 3 steps to doing indexation allowance ( Jane bought an asset in June 2003 for 1,200 and rpi ( 181.3) and sold it aug for 2024 for 5,350

Answer 1

1. If something gets bought before 1 Jan 2018 - use use rpi ( 278.1 ) . After 1 Jan 2018, THERE IS NO INDEXATION
2. 3 steps
3. Indexation factor
   ( 278.1 - indexation given ) / indexation given = answer 1
4. Asset you bought price x answer 1 = GAIN
5. Sold price -( how much you bought it for + gain)

• example
  1. 278.1 - 181.3 / 181.3 =0.534
  2. 1,200 x 0.534 =634
  3. 5,350 - (1,200 + 634)