ATO Interpretative Decision
ATO ID 2001/588 (Withdrawn)
Goods and Services Tax
GST and margin scheme for sale of property originally purchased after 30 June 2000 under the margin schemeFOI status: may be released
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This ATO ID is withdrawn as it is superseded by Goods and Services Tax Ruling GSTR 2006/8.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 24 August 2007
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can the entity, a property developer, choose to apply the margin scheme under section 75-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells real property that it purchased after 30 June 2000 under the margin scheme?
Decision
Yes, the entity can choose to apply the margin scheme under section 75-5 of the GST Act when it sells real property that it purchased after 30 June 2000 under the margin scheme.
Facts
The entity is a property developer and is registered for goods and services tax (GST).
The entity purchased real property after 30 June 2000. The entity purchased the property through a taxable supply on which the GST was worked out using the margin scheme.
The entity is now selling the freehold interest in the property. The sale of the property by the entity is a taxable supply under section 9-5 of the GST Act.
Reasons for Decision
Subsection 75-5(1) of the GST Act provides that if an entity makes a taxable supply of real property by:
- (a)
- selling a freehold interest in land;
- (b)
- selling a stratum unit; or
- (c)
- granting or selling a long-term lease;
the entity may choose to apply the margin scheme in working out the amount of GST on the supply.
In this case, the entity is making a taxable supply under section 9-5 of the GST Act by selling a freehold interest in property. However, under subsection 75-5(2) of the GST Act, an entity cannot choose to apply the margin scheme if it acquired the freehold interest, stratum unit or long term lease through a taxable supply on which the amount of GST was worked out without applying the margin scheme.
From the facts, the entity purchased the real property through a taxable supply under the margin scheme. Therefore, the entity is entitled to choose to apply the margin scheme under section 75-5 of the GST Act when it sells the property.
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
section 75-5
subsection 75-5(1)
subsection 75-5(2)
subsection 75-10(1)
subsection 75-10(2)
Keywords
Goods & services tax
GST property & construction
GST margin scheme
GST sale of real property
GST supplies & acquisitions
Taxable supply
ISSN: 1445-2782
| Date: | Version: | |
| 4 September 2001 | Original statement | |
| You are here → | 24 August 2007 | Archived |