• ### Subdivided land

You may use any reasonable method of apportionment to work out the proportion of the purchase price for a subdivided allotment or strata title unit.

If you purchase land and subdivide it, or build strata title units on it and later apply the margin scheme, the margin is the selling price less the corresponding portion of the price you paid for the property.

Example: working out the margin on subdivided land or strata title units

Josephine is a GST registered property developer. She purchased a 2,000 square metre block of land for \$240,000 from a private individual who was not required to be registered for GST. The block is of equal value per square metre. She subdivided the block into two allotments of 600 square metres each, and one allotment of 800 square metres.

Josephine used an area basis to work out the purchase price of the subdivided allotments. The purchase price for each of the 600 square metre allotments was \$72,000 (600 ÷ 2,000 × \$240,000), and the purchase price of the 800 square metre allotment was \$96,000 (800 ÷ 2,000 × \$240,000).

If Josephine sells the 800 square metre allotment for \$140,000, the GST payable will be the selling price minus the purchase price of the property divided by eleven, that is (\$140,000 − \$96,000) × (1÷11). Therefore she must pay \$4,000 GST on the sale of this allotment.

End of example

If the purchase price is the same as, or more than the selling price of the property, you do not have a margin so you do not have to pay GST on the sale.