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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your private ruling

Authorisation Number: 1012461769622

Ruling

Subject: Sale of property

Issue

Can you apply the margin scheme to the sale of the proposed residential units?

Decision:

No, you cannot apply the margin scheme to the sale of the proposed residential units.

This ruling applies for the following periods:

N/A

The scheme commences on:

N/A

Relevant facts and circumstances

Relevant legislative provisions

A New Tax System (Good and Services Tax) Act 1999 (GST Act) - Section 75-5

Reasons for decision

Subsection 75-5(1) of the A New Tax System (Good and Services Tax) Act 1999 (GST Act) states that:

The *margin scheme applies in working out the amount of GST on *taxable supply of *real property that you make by:

if you and the *recipient of the supply have agreed in writing that the margin scheme is to apply.

(Items marked with asterisks are defined at section 195-1 of the GST Act)

Subsection 75-5(2) of the GST Act state as follows:

Paragraph 75-5(3)(a) of the GST Act states that a supply is ineligible for the margin scheme if it is a taxable supply on which the GST was worked out without applying the margin scheme.

You acquired the two properties, which were subsequently consolidated, as taxable supplies without the application of the margin scheme. As such, when you sell the proposed residential units, those supplies will be ineligible for the margin scheme.

You are required to remit 1/11th of the price for which you sell these proposed residential units to the Australian Taxation Office as GST.


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