| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011610588447
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: GST and an approved valuation for the purposes of the margin scheme
Question
Is the written valuation obtained from an organisation an approved valuation for the purposes of Division 75 of the A New Tax System (Goods and services Tax) Act 1999 (GST Act)?
Answer: Yes.
Relevant facts and circumstances
You are registered for goods and services tax (GST) and have been registered since 1 July 2000.
You entered into a contract for the sale of real property (Land) with a purchaser (P).
The Land is located in Australia.
You owned the Land prior to the introduction of GST.
The sale of the Land to P constituted a taxable supply.
You and the purchaser agreed in writing before the supply of the Land that the margin scheme would apply to the sale.
You and the purchaser agreed to use the valuation method as provided for by subsection 75-10(3) of the GST Act to calculate the margin.
You and the purchaser also agreed to use a professional valuer to value the Land as set out at paragraph 13 of A New Tax System (Goods and Services Tax) Margin Scheme Valuation Requirements Determination MSV 2009/1 (Determination).
You determined that your circumstances fall under Item 1 of the table provided in subsection 75-10(3) of the GST Act (Table) and that the Land should therefore be valued as at the day specified in Item 1 of the Table, this date being 1 July 2000.
You received a written valuation incorporating a valuation certificate for the purposes of the margin scheme.
In relation to the written valuation (note that all references are clauses in the valuation):
· The valuer was a certified practicing valuer (reg. no. provided).
· The valuation is in writing.
· The valuation adopted the meaning of market value as defined by the Australian Property Institute (1.6 Definition of Market Value). A market value analysis is set out at 5.1 Valuation Methodology, which analyses key site sales in the same street.
· The valuer assured our client that the valuation is made in a manner that is not contrary to the professional standards recognised in Australia for the making of real property valuations.
· A full description of the property being valued is set out at 2.0 Land Description.
· The applicable valuation date, as set out on the front page, at 1.3 Purpose of Valuation, 1.4 Disclaimer and 7.1 valuation Assessment (this date being 1 July 2000).
· The certificate was supplied to you on a specific date as per 7.1 Valuation Assessment.
· The market value of the property at the valuation date is stated at 5.1 Valuation Methodology and 7.1 Valuation Assessment.
· The valuation approach and the valuation calculation are set out at 5.1 Valuation Methodology.
· The name and qualifications of the valuer are set out on the last page of the valuation.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) 1999
Section 75-10.
Reasons for decision
Summary
The valuation is an approved valuation for the purposes of the margin scheme.
Detailed reasoning
An entity that sells real property under the margin scheme and applies subsection 75-10(3) of the GST Act to calculate the margin is required under this subsection to use an approved valuation of the real property. The real property is then valued as at the day specified in the corresponding item given in the 3rd column of the Table.
Approved valuation
With reference to subsection 75-35(2) of the GST Act, section 195-1 of the GST Act provides that the Commissioner of Taxation (Commissioner) may by legislative instrument determine in writing those requirements that must be satisfied for the valuation to be an approved valuation for the purposes of subsection 75-10(3) of the GST Act. The Commission has provided such an instrument, this being the Determination.
One of the methods available as an approved valuation is given at paragraph 13 of the Determination and is the valuation done by a professional valuer satisfying the following requirements:
1. the valuer must be a * professional valuer ;
2. the valuation must be in writing;
3. the valuation must determine the market value of the interest, unit or lease at the valuation date;
4. the valuation must be made in a manner that is not contrary to the professional standards recognised in Australia for the making of real property valuations;
5. the valuation must include a signed certificate which specifies:
(a) a full description of the property being valued;
(b) the applicable valuation date;
(c) the date the valuer provides the valuation to the supplier;
(d) the market value of the property at the valuation date;
(e) the valuation approach and the valuation calculation; and
(f) the name and qualifications of the valuer;
6. if the interest, unit or lease has been supplied by the Commonwealth, a State or a Territory;
(a) and the supplier has held the interest, unit or lease since before 1 July 2000;
(b) there were no improvements on the land or premises in question as at 1 July 2000; and
(c) there are improvements on the land or premises in question on the day on which the taxable supply takes place,
the valuation must be made as if no improvements had been made at the date of the taxable supply; and
7. the valuation must be made by the time specified in clauses 21 to 23 below.
Note that the asterisks denote a defined term in the Determination.
Professional valuer
The Determination further defines a professional valuer as:
1. a person registered or licensed to carry out real property valuations under a Commonwealth, a State or a Territory law; or
2. a person who carries on a business as a valuer in a State or a Territory where that person is not required to be licensed or registered to carry on a business as a valuer; or
3. a person who is:
(a) a member of the Australian Property Institute and accredited as a Certified Practicing Valuer; or
(b) a member of the Royal Institution of Chartered Surveyors and accredited as a Chartered Valuation Surveyor; or
(c) a member of the Australian Valuers Institute and accredited as a Certified Practicing Valuer.
In your case, you sold Land under the margin scheme using subsection 75-10(3) of the GST Act using a valuation date as at Item 1 of the Table (1 July 2000). You obtained a valuation who then provided you with a written valuation which incorporates a valuation certificate. In relation to your written valuation:
· The valuer was a certified practicing valuer (reg. no. provided).
· The valuation is in writing.
· The valuation adopted the meaning of market value as defined by the Australian Property Institute (1.6 Definition of Market Value). A market value analysis is set out at 5.1 Valuation Methodology, which analyses key site sales in the same street.
· The valuer assured our client that the valuation is made in a manner that is not contrary to the professional standards recognised in Australia for the making of real property valuations.
· A full description of the property being valued is set out at 2.0 Land Description.
· The applicable valuation date, as set out on the front page, at 1.3 Purpose of Valuation, 1.4 Disclaimer and 7.1 Valuation Assessment (this date being 1 July 2000).
· The certificate was supplied to you 26 July 2010 as per 7.1 Valuation Assessment.
· The market value of the property at the valuation date is stated at 5.1 Valuation Methodology and 7.1 Valuation Assessment.
· The valuation approach and the valuation calculation are set out at 5.1 Valuation Methodology.
· The name and qualifications of the valuer are set out on the last page of the certificate.
We consider that the correct valuation date for the Land to be sold under the margin scheme is 1 July 2000. Also, given that the valuation and incorporated valuation certificate meet the requirements of paragraph 13 of the Determination and was performed by a professional valuer as defined in the Determination, the valuation is an approved valuation for the purposes of the margin scheme.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
