Valuation issues
We have issued a number of legislative determinations that are applicable to margin scheme valuations.
Valuations are required to be prepared by a professional valuer to determine the market value of the property at the valuation date. Valuers need to reflect the value of the subject property on an 'as is' basis as at the valuation date.
When looking at the application of the margin scheme, we often find valuations which have been used in calculating the GST payable. Often, when certain elements of a valuation are outside an acceptable range, the ultimate valuation is higher than it should be, resulting in a lower margin and less GST payable.
We accept valuations can be a subjective assessment of a property's value and there can be interpretive assessments of impacts on the property value. However, there is still an expectation that values will fall within a 'reasonable range'. This is regardless of the valuer who is valuing the property, or the method adopted.
If there is sufficient merit in the valuer's adopted assumptions and conclusions the valuation can be accepted as a complying valuation. However, where the valuer's assumptions and conclusions are not sustainable, based on evidence, or are not reasonable, the valuation cannot be considered a complying professional valuation.
We have identified a number of recurring issues and have provided our position on these issues.
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