If you are selling property under the margin scheme, you may need to have your property valued to work out the margin, using an approved valuation method. An approved valuation is generally only required for property that you have owned prior to 1 July 2000.
Valuation methods you can use
There are three valuation methods available. As a general rule, if you have chosen to apply a valuation method to work out the margin, you must have undertaken a valuation by the due date for lodging your activity statement for the tax period the sale applies to.
From 1 December 2005, valuation methods include:
- the market value, in writing by a professional valuer
- the purchase price in a contract entered into before 1 July 2000 by parties dealing at arm’s length
- the most recent value set by a state or territory government department for rating or land tax purposes, made before the valuation date.
For properties that are partly completed premises at the valuation date, you must use the value in writing, obtained from a professional valuer.
A professional valuer is any of the following:
- a person registered or licensed to carry out real property valuations under a Commonwealth, state or territory law
- a person who runs a business as a valuer in a state or territory where that person is not required to be licensed or registered to do so
- a person who is
- a member of the Australian Property Institute, and accredited as a Certified Practicing Valuer
- a member of the Royal Institute of Chartered Surveyors, and accredited as a Chartered Valuation Surveyor
- a member of the Australian Valuers Institute, and accredited as a Certified Practicing Valuer.
- MSV 2005/3 A New Tax System (Goods and Services Tax) Margin Scheme Valuation Requirements Determination
- MSV 2009/1 A New Tax System (Goods and Services Tax) Margin Scheme Valuation Requirements Determination
If you do not have a valuation when your activity statement is due
If you have chosen to apply a valuation method to work out the margin, you must have had a valuation undertaken by the due date for lodging your activity statement for the tax period the sale applies to.
There may be exceptional circumstances that prevent you from obtaining a valuation by your activity statement due date. If you have made an oversight we may allow you a short period to obtain an approved valuation.
If you are using the valuation method, you can choose to work out the margin based on an approved valuation at any time up until your activity statement lodgment due date.
- PS LA 2005/16 Further period to make an approved valuation for the purposes of working out the margin for the supply under Division 75 of the A New Tax System (Goods and Services Tax) Act 1999
If your valuation is not valid
If you find that the valuation method you used is not one listed in this guide, you can:
- fix the actual valuation you used so that it is valid, that is, replace it with an approved valuation
- use another approved valuation that was done by your activity statement due date
- work out the margin and GST payable on the sale of completed property using a value for rating or tax purposes made before the valuation date
- use the consideration method.
A value for rating or tax purposes is the value of the property that is worked out by:
- a state or territory government department
- a professional valuer on behalf of a state or territory government department for rating purposes.
If you find you have used a valuation method that is not valid (that is, not an approved valuation), we may allow you to work out the margin on the sale again. If you correct a valuation or use a different valuation, and you must pay more GST, we may apply administrative penalties and the general interest charge. However, if you have made a genuine mistake, we will not apply administrative penalties.
Last modified: 24 Jun 2016QC 18646