| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1011808345492
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: Request for refund of GST
Question:
Are you entitled to a refund of overpaid GST on your sale of the properties due to an error from your accountant in applying the margin scheme?
Answer: Yes.
You are entitled to a refund of the GST payable on the sale of the properties.
Relevant facts and circumstances
You are registered for the Goods and Services Tax (GST).
You have operated for many years as a spec home builder.
You recently conducted a review of your property sales as you believe there were cases where you were entitled to use the margin scheme to calculate the amount of GST, but you failed to do so due to an error from your accountant.
You discovered some cases where this occurred, which you believe lead to an overpayment of GST.
You have supplied copies of the relevant sale and purchase contracts.
Each sale contract contains a statement: to the affect that the margin scheme was to be used.
Reasons for decision
The margin scheme is an alternative method of calculating the amount of GST payable on supplies of freehold interests in land, stratum units or long term leases. The conditions for the use of the margin scheme are set out in Division 75 of the A new tax system (Goods and Services Tax) Act 1999 (GST Act).
Among other things, section 75-5 of the GST Act provides that an entity can use the margin scheme if the entity and the recipient of the supply have agreed in writing that the margin scheme is to apply to the sale of the property.
You will not be able to use the margin scheme if you are selling real property that you:
· acquired through a taxable sale on which the margin scheme was not used;
· inherited from a person who would not have been able to use the margin scheme;
· acquired from a member of the same GST group who would not have been able to use the margin scheme; or
· as a participant in a GST joint venture, acquired from the joint venture operator who would not have been able to use the margin scheme.
In this instance there is no evidence that suggests that any arrangement exists that would have the effect of producing an outcome contrary to the policy of the legislation.
Furthermore the copies of the sale contracts show that it was clearly the intention of all parties to use the margin scheme in connection with the sale of the properties. You were therefore eligible to use the margin scheme when you sold the properties.
The fact that you did not use the margin scheme was due to an error by your accountant. In order to rectify this error, and obtain a refund of the overpaid GST, you will need to lodge amended BASs for the relevant tax periods.
You advised that your accountant treated those supplies as taxable. In the event you have issued tax invoices to the recipients and those recipients are registered for GST they may have claimed input taxed credits. Where this is the case you cannot use 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).
