A New Tax System (Goods and Services Tax) Act 1999

Chapter 4 - The special rules  

Part 4-2 - Special rules mainly about supplies and acquisitions  

Note:

The special rules in this Part mainly modify the operation of Part 2-2 , but they may affect other Parts of Chapter 2 in minor ways.

Division 75 - Sale of freehold interests etc.  

75-5   Applying the margin scheme  

(1)    

The * margin scheme applies in working out the amount of GST on a * taxable supply of * real property that you make by:

(a) selling a freehold interest in land; or

(b) selling a * stratum unit ; or

(c) granting or selling a * long-term lease ;

if you and the * recipient of the supply have agreed in writing that the margin scheme is to apply.

(1A)    

The agreement must be made:

(a) on or before the making of the supply; or

(b) within such further period as the Commissioner allows.

Note:

Refusing to allow, or allowing, a further period within which to make an agreement is a reviewable GST decision (see Subdivision 110-F in Schedule 1 to the Taxation Administration Act 1953 ).

(1B)    

A supply that you make to your * associate is taken for the purposes of subsection (1) to be a sale to your associate whether or not the supply is for * consideration .

(2)    

However, the * margin scheme does not apply if you acquired the entire freehold interest, * stratum unit or * long-term lease through a supply that was * ineligible for the margin scheme .

Note:

If you acquired part of the interest, unit or lease through a supply that was ineligible for the margin scheme, you may have an increasing adjustment: see section 75-22 .

(3)    

A supply is ineligible for the margin scheme if:

(a) it is a * taxable supply on which the GST was worked out without applying the * margin scheme ; or

(b) it is a supply of a thing you acquired by * inheriting it from a deceased person, and the deceased person had acquired all of it through a supply that was ineligible for the margin scheme; or

(c) it is a supply in relation to which all of the following apply:

(i) you were a * member of a * GST group at the time you acquired the interest, unit or lease in question;

(ii) the entity from whom you acquired it was a member of the GST group at that time;

(iii) the last supply of the interest, unit or lease by an entity who was not (at the time of that supply) a member of the GST group to an entity who was (at that time) such a member was a supply that was ineligible for the margin scheme; or

(d) it is a supply in relation to which both of the following apply:

(i) you acquired the interest, unit or lease from the * joint venture operator of a * GST joint venture at a time when you were a * participant in the joint venture;

(ii) the joint venture operator had acquired the interest, unit or lease through a supply that was ineligible for the margin scheme; or

(e) it is a supply in relation to which all of the following apply:

(i) you acquired the interest, unit or lease from an entity as, or as part of, a * supply of a going concern to you that was * GST-free under Subdivision 38-J ;

(ii) the entity was * registered or * required to be registered , at the time of the acquisition;

(iii) the entity had acquired the entire interest, unit or lease through a taxable supply on which the GST was worked out without applying the margin scheme; or

(f) it is a supply in relation to which all of the following apply:

(i) you acquired the interest, unit or lease from an entity as, or as part of, a supply to you that was GST-free under Subdivision 38-O ;

(ii) the entity was registered or required to be registered, at the time of the acquisition;

(iii) the entity had acquired the entire interest, unit or lease through a taxable supply on which the GST was worked out without applying the margin scheme; or

(g) it is a supply in relation to which all of the following apply:

(i) you acquired the interest, unit or lease from an entity who was your * associate , and who was registered or required to be registered, at the time of the acquisition;

(ii) the acquisition from your associate was without * consideration ;

(iii) the supply by your associate was not a taxable supply;

(iv) your associate made the supply in the course or furtherance of an * enterprise that your associate * carried on ;

(v) your associate had acquired the entire interest, unit or lease through a taxable supply on which the GST was worked out without applying the margin scheme.

(3A)    

Subparagraphs (3)(g)(iii) and (iv) do not apply if the acquisition from your * associate was not by means of a supply by your associate.

(4)    

A reference in paragraph (3)(b), (c) or (d) to a supply that was ineligible for the margin scheme is a reference to a supply:

(a) that was ineligible for the margin scheme because of one or more previous applications of subsection (3); or

(b) that would have been ineligible for the margin scheme for that reason if subsection (3) had been in force at all relevant times.