Valuation issues paper
The Australian Taxation Office (ATO) has issued a number of legislative determinations that are applicable to margin scheme valuations, the latest being MSV 2009/1External Link. All determinations require valuations prepared by professional valuers to determine the market value of the property at the valuation date. The ATO considers it is a requirement in a market valuation for the valuer to reflect the value of the subject property on an 'as is' basis as at the valuation date.
We have undertaken a significant number of compliance activities since GST was introduced in relation to the sale of real property and whether the margin scheme provisions have been applied correctly. In examining the application of the margin scheme, we often encounter 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.
In reviewing the responses we have received regarding non-complying valuations, we have identified a number of recurring issues. The following outlines some of the issues identified and the ATO's position when these issues occur.