ACCA Taxation (F6) Practice Exam

If spouses jointly own an asset, can they both use their annual exempt amounts against chargeable gain?

1. Only the spouse who inherits the asset can use it

2. Yes, they can both use their AEA

3. Only one spouse can utilize the AEA regardless of ownership

4. No, the asset must be transferred to use the AEA

The correct answer is: Yes, they can both use their AEA

When spouses jointly own an asset, both can utilize their annual exempt amounts (AEA) against chargeable gains. This is because each spouse is considered an individual taxpayer and has their own AEA. Therefore, when computing the chargeable gain from the disposal of the asset, the total annual exempt amount available is the sum of both spouses' AEAs. This means that not only does this effectively reduce the overall taxable gains realized from the asset, but it also highlights the tax efficiency that can be achieved through joint ownership. This approach aligns with tax regulations allowing individuals to benefit from their respective allowances, regardless of whether they hold an asset jointly or individually. Thus, the correct choice demonstrates an understanding of how tax exemption thresholds apply in jointly owned scenarios, allowing both spouses to take advantage of their tax allowances in full.