| Disclaimer This edited version has been archived due to the length of time since original publication.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 your private ruling
Authorisation Number: 1012171088385
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. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Eligibility for the margin scheme
Question 1
Are the supplies by Entity A and Entity Z, collectively or individually, of the real property being:
Property 1
Property 2, and
Property 3.
ineligible for the margin scheme in accordance with Division 75 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act?
Answer
No
Relevant facts and circumstances
You (BAE) are the GST group representative for Entity A and Entity Z.
Entity A was previously named ABC Pty Ltd.
Entity B was previously named XYZ Pty Ltd.
Entity A and Entity Z held the relevant properties at the time that they became part of the GST group.
Entity A and Entity Z are parties to a draft Contract of Sale of Real Estate. You provided a copy of the draft contract as at ddmmyyyy. The property listed in the draft sale document is the land described in the current certificates of title.
A clause of the draft contract states:
· The parties agree that the Margin Scheme will apply in working out the amount of GST on the Taxable Supply of the Property if, within 10 Business Days after the date of this Contract, the Purchaser gives written notice to the Vendor requesting that the Margin Scheme apply in respect of the supply of the Property under this Contract.
· The request (and agreement in writing) to apply the Margin Scheme will be made prior to settlement.
· You provided various documents which show that ABC Pty Ltd owned properties 1 and 2 prior to 1 July 2000. ABC Pty Ltd is now Entity A.
· You provided various documents which show that XYZ Pty Ltd owned property 3 prior to 30 June 2000. XYZ Pty Ltd became Entity Z.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Division 75
A New Tax System (Goods and Services Tax) Act 1999 Subsection 75-5(3)
Reasons for decision
Under Division 75 of the GST Act, the margin scheme applies in working out the amount of GST payable on a taxable supply of real property if:
the supplier and the recipient of the supply agree in writing that the margin scheme is to apply, and
the agreement to use the margin scheme is made on or before the making of the supply, or within such further period as the Commissioner allows, and
the supplier did not acquire the freehold interest through a supply that was ineligible for the margin scheme.
Subsection 75-5(3) of the GST Act states the circumstances under which a supply is ineligible for the margin scheme. As Entity A and Entity Z are members of a GST group, the most relevant provision is paragraph 75-5(3)(c) of the GST Act which deals with disposals by GST group members.
However, neither Entity A nor Entity Z was a GST group member when they acquired their interests in the relevant properties. Therefore, paragraph 75-5(3)(c) of the GST Act will not apply.
In the circumstances outlined, no other provision in section 75-5 of the GST Act operates to make the supply of the relevant properties by Entity A and Entity Z ineligible for the margin scheme.
Therefore, the supply of the relevant properties by Entity A and Entity Z, collectively or individually, will not be ineligible for the margin scheme to apply.
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).
