ATO Interpretative Decision
ATO ID 2001/393 (Withdrawn)
Goods and Services Tax
GST and timing of the choice to apply the margin schemeFOI status: may be released
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This decision does not accurately indicate the ATO view and has been withdrawn.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is the entity, a vendor of real property, required, under Division 75 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), to make the choice to apply the margin scheme to the sale of the property prior to settlement?
Decision
No, the entity is not required, under Division 75 of the GST Act, to make the choice to apply the margin scheme to the sale of the property prior to settlement.
Facts
The entity is a vendor of real property. In this case, the entity is selling a freehold interest in land by way of a taxable supply under section 9-5 of the GST Act.
The entity entered into the contract of sale for the property, with settlement occurring approximately three months later. At the time of entering into the contract of sale, there was no agreement between the entity and the purchaser that the margin scheme would be applied to the sale; nor had the entity advised the purchaser of its intention to apply the margin scheme to the sale. The purchaser only became aware that the entity was choosing to apply the margin scheme to the sale at the time of settlement.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Subsection 75-5(1) of the GST Act provides that where a vendor makes a taxable supply of real property by:
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- selling a freehold interest in land; or
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- selling a stratum unit; or
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- granting or selling a long term lease;
the vendor may choose to apply the margin scheme in working out the amount of GST on the supply.
There are no provisions in Division 75 of the GST Act or any other provisions of the GST legislation that specify when the vendor must make the choice to use the margin scheme. In the absence of any agreement between the parties to the contrary, the choice to use the margin scheme should be made at the time the vendor makes a taxable supply of real property by selling a freehold interest in land, by selling a stratum unit or by granting or selling a long-term lease, that is, at the time of settlement.
The vendor is not required to issue a tax invoice for a taxable supply that is solely a supply of real property under the margin scheme.
Date of decision: 9 August 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 75
subsection 75-5(1)
Related Public Rulings (including Determinations)
GSTR 2000/21
Other References:
Property and Construction Issues Log - Issue 15.1.10
Keywords
Goods & services tax
GST free
GST property & construction
GST margin scheme
GST sale of real property
GST special rules
ISSN: 1445-2782
| Date: | Version: | |
| 9 August 2001 | Original statement | |
| You are here | 5 November 2002 | Archived |
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