ACCA Taxation (F6) Practice Exam

What is classified as a chargeable asset?

1. Any asset that will not result in capital gains tax

2. Any asset subject to income tax

3. Any asset that if sold would be subject to capital gains tax

4. Only property assets

The correct answer is: Any asset that if sold would be subject to capital gains tax

The classification of a chargeable asset is specifically tied to how capital gains tax (CGT) is applied upon the disposal of the asset. A chargeable asset is any asset that, when sold, will potentially lead to a capital gain or loss, meaning that the disposal may be subject to CGT. When an individual or entity sells a chargeable asset, the profit made from that sale (the difference between the selling price and the original purchase price) could be taxed under capital gains rules. Therefore, if an asset is capable of generating a capital gain upon sale, it qualifies as a chargeable asset. Other options do not accurately define a chargeable asset. For instance, saying it is any asset that will not result in capital gains tax overlooks the key aspect of how assets are categorized concerning tax implications. Similarly, the notion that only property assets are chargeable is misleading, as various kinds of assets—including stocks, bonds, and collectibles—can also be chargeable assets. Hence, the correct answer highlights the essence of chargeable assets as those involving CGT upon their sale or disposal.