In the 2020 capital gains example for Margaret, which statement is true about the chargeable gain?

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Prepare for the QFA Investments Exam 1. Study with flashcards and multiple-choice questions with detailed explanations. Enhance your understanding and succeed on your exam!

Multiple Choice

In the 2020 capital gains example for Margaret, which statement is true about the chargeable gain?

Explanation:
Chargeable gain is the amount of gain that becomes taxable after applying the annual exempt amount (and any other reliefs). In 2020, the annual exemption for an individual is €1,270. Margaret’s example uses a gross gain on disposal and then subtracts this €1,270 exemption to arrive at the chargeable amount. The result of that calculation in the example is €6,700, so that figure is the chargeable gain. The other numbers would require a different gross gain or a different exemption amount, which isn’t what the problem shows.

Chargeable gain is the amount of gain that becomes taxable after applying the annual exempt amount (and any other reliefs). In 2020, the annual exemption for an individual is €1,270. Margaret’s example uses a gross gain on disposal and then subtracts this €1,270 exemption to arrive at the chargeable amount. The result of that calculation in the example is €6,700, so that figure is the chargeable gain. The other numbers would require a different gross gain or a different exemption amount, which isn’t what the problem shows.

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