GST and the margin scheme - completing your activity statement

Obtain a printed copy of this publication

You can download a printable version of GST and the margin scheme - completing your activity statement (NAT 10670, PDF, 106KB).

Terms we use

When we say:

• property, we are referring to the GST term real property
• sales, we are referring to the GST term supply
• purchases, we are referring to the GST term acquisitions
• GST credits, we are referring to the GST term input tax credits
• reporting period, we mean the tax period that applies to you
• payment made or received, we are referring to the GST term consideration
• business, we are referring to the GST term enterprise.

What is the margin scheme?

The margin scheme is a method of calculating the goods and services tax (GST) payable on property sales you make when you:

• sell a freehold interest in land
• sell a stratum unit
• grant or sell a long-term lease.

If you are eligible to use the margin scheme, you can calculate GST on your 'margin' for the property sale, rather than GST of 1/11 of the sale price.

If you sell property, and are not eligible, or do not want to use the margin scheme, calculate GST as 1/11th of the sale price.

What is the margin?

Depending on when the property was purchased and who it was purchased from, the margin is generally the difference between the sale price and:

• the amount the seller paid for the property, or
• in some circumstances, a valuation of the property.

There are special rules for working out the margin in certain circumstances when the property was bought as a GST-free supply of a going concern or farmland or from:

• a member of a GST group
• a GST joint venture operator
• a deceased estate, or
• associates.

How do you complete your activity statement?

You may use either the calculation worksheet method or the accounts method to complete the relevant boxes on your activity statement for the reporting period.

The amounts you report on your activity statement will depend on the accounting basis you have chosen, or are required to use. You can account on a cash basis or a non-cash basis.

How do you account for GST when using the margin scheme?

Sales

If you sell property and have chosen to use the margin scheme, you only report the amount of the 'margin' on your sale at G1 (total sales). Do not report the full amount of payment you receive.

If the margin is nil (or a negative amount), do not report any amount at G1 (total sales).

If you are using the accounts method, report the amount of GST on your margin at 1A (GST on sales). If you are using the calculation worksheet method, use the worksheet to calculate the amount of GST to report at 1A (GST on sales).

Purchases

If you buy property and the GST included in the price you paid was worked out using the margin scheme, you are not entitled to a GST credit for the purchase. Do not report the amount of your payment for the purchase at G10 (capital purchases) or G11 (non-capital purchases).

Do not report any GST credit for the purchase at 1B (GST on purchases).

Tax invoices

If you use the margin scheme to work out the GST on your sale, you do not have to issue a tax invoice to the purchaser. This is because the purchaser cannot claim GST credits on a sale made using the margin scheme.

More information

If you need more information, refer to:

• GST and the margin scheme (NAT 15145)
• GSTR 2000/21 Goods and services tax: the margin scheme for supplies of real property held prior to 1 July 2000
• GSTR 2006/6 Goods and services tax: improvements on the land for the purposes of Subdivision 38-N and Division 75
• GSTR 2006/7 Goods and services tax: how the margin scheme applies to a supply of real property made on or after 1 December 2005 that was acquired or held before 1 July 2000.
• GSTR 2006/8 Goods and services tax: the margin scheme for supplies of real property acquired on or after 1 July 2000

To obtain a copy of our publications or for more information:

• visit our website at www.ato.gov.au
• phone 13 28 66, or
• write to us at PO Box 9990 in your capital city.

If you don't speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.

If you have a hearing or speech impairment and have access to appropriate TTY or modem equipment, phone 13 36 77. If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727.

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.

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