• Eligibility to use the margin scheme when selling property

    The eligibility requirements for the margin scheme were impacted by amendments to the GST Act in 2005 and 2008. The amendments affect whether you will be eligible to use the margin scheme where property has been purchased or acquired either from:

    • inheriting the property
    • an associate
    • a GST group member
    • a participant in a GST joint venture
    • an associate without payment
    • a GST-free sale (either as part of a going concern or farmland).

    This guide will help you work out if you are eligible to use the margin scheme and if the 2005 and 2008 amendments affect you.

    If you have not purchased or acquired property in the ways set out above, you should refer to GST and the margin scheme to work out your eligibility to use the margin scheme.

    See also:

    • GST definitions: business, GST credits, payment, property, purchases, sales

    About the margin scheme

    The margin scheme is a way of working out the GST you must pay when you sell property as part of your business. You can only apply the margin scheme if you are eligible and the sale of the property is taxable.

    You would be able to use the margin scheme if you purchased the property before 1 July 2000 (the start of GST) or purchased property after 1 July 2000 from someone that either:

    • was not registered or required to be registered for GST
    • sold you existing residential premises
    • sold the property to you as part of a GST-free going concern
    • sold the property to you as GST-free farmland
    • sold you the property using the margin scheme.

    If you originally purchased the property as fully taxable and the margin scheme was not used, you are not eligible to use the margin scheme.

    Additionally, in 2005 and 2008 other eligibility requirements were introduced that may also affect whether you can use the margin scheme and if eligible how the margin scheme applies. It is important to understand these changes to work out if you are able to use the margin scheme on your taxable property sales.

    Find out about:

    GST and the margin scheme

      Last modified: 06 Jul 2016QC 24880