• Record keeping

    In addition to your normal GST record keeping obligations, we recommend you keep:

    • accounting records for the transaction
    • evidence of the original purchase price of the property
    • records showing how you have applied the margin scheme and identifying the particular property that you have sold using the margin scheme
    • records showing your agreement with the purchaser to use the margin scheme
    • if you used the valuation method, the valuations or other documents showing how you arrived at the value of the property.

    Examples of these records include:

    • sale and purchase contracts and settlement statements
    • details of how you worked out the margin
    • your agreement in writing to use the margin scheme, see the clause included in deciding when to use the margin scheme
    • the approved valuation.

    Note: You must keep all of these records that relate to your sale for five years after the sale.

    Records for subdivided land

    If you are subdividing land or building stratum title units on the land, you must keep records showing how you worked out the margin for each subdivided allotment or each stratum title unit.

    For example, you should keep records on how you apportioned:

    • a valuation of land you held at 1 July 2000 which has now been subdivided or developed into stratum units, or
    • the purchase price of land acquired after 1 July 2000 which has been subdivided or developed into stratum units.

    A valuation or the purchase price can be apportioned by using any fair and reasonable basis.

    Issuing a tax invoice

    You do not need to issue a tax invoice to the purchaser for sales made solely under the margin scheme. This is because the purchaser cannot claim a GST credit for a sale made under the margin scheme. You may however, issue a receipt for the price paid.

    Record keeping for sales and contracts made before 29 June 2005

    For these sales, sellers must have kept records that evidence their choice to use the margin scheme and when that choice was made.

    The record of your choice to apply the margin scheme on sales before 29 June 2005 would often have been contained in the contract of sale. Other forms of evidence may include:

    • correspondence
    • a company or trust minute
    • a file note.

    The records must have identified the property by:

    • a project lot number
    • certain lots on a particular estate
    • land contained in a specified contract.

    We may also accept evidence of your choice to apply the margin scheme held by other parties, such as your professional advisers, valuers or financiers.

    Last modified: 24 Jun 2016QC 18646