ACCA Taxation (F6) Practice Exam

Which of the following is a correct statement about capital gains tax?

1. It is only applicable to corporations

2. Capital gains tax only applies to residential properties

3. It is assessed on the net gains from all chargeable assets

4. It has a fixed percentage rate regardless of the asset

The correct answer is: It is assessed on the net gains from all chargeable assets

Capital gains tax is assessed on the net gains from all chargeable assets, making this statement accurate. When an individual or entity sells an asset for more than its purchase price, the profit, known as the capital gain, is subject to taxation. This includes various types of assets such as stocks, bonds, real estate, and collectibles, not just residential properties or those owned by corporations. The chargeable assets encompass a wide variety of items, illustrating that capital gains tax is not limited to any single class of assets, such as residential property or corporate holdings. This broad application is crucial for understanding how capital gains tax operates in practice. Other options do not reflect the comprehensive nature of capital gains tax. For instance, the statement about it being applicable only to corporations ignores the fact that individuals and partnerships are also liable for capital gains tax on their disposals of chargeable assets. Additionally, limiting capital gains tax solely to residential properties does not consider all the other qualifying assets that could incur capital gains tax. Lastly, capital gains tax typically does not have a fixed rate, as rates can vary depending on the type of asset and the individual’s overall income bracket.