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This edited version has been archived due to the length of time since original publication.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

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 written advice

Authorisation Number: 1012718373087

Ruling

Subject: Refund of overpaid GST

Unless otherwise stated, all legislative references are legislative references to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

References to 'MSV 2005/3' and 'MSV 2009/1' are references to A New Tax System (Goods and Services Tax) Margin Scheme Valuation Requirements Determination MSV 2005/3 and A New Tax System (Goods and Services Tax) Margin Scheme Valuation Requirements Determination MSV 2009/1 respectively .

Question 1

Is each lot of land, which is the subject of this ruling, land on which there are no improvements as at 1 July 2000?

Answer

Yes.

Question 2

If he answer to Question 1 is 'Yes', in part or in full, are you entitled to a refund of overpaid GST related to the sales of these lots of land where the GST payable was previously miscalculated?

Answer

Yes, in full.

Question 3

Where applicable may you have an additional period of time within which a valuation may be made?

Answer

This question is no longer applicable.

Relevant facts and circumstances

You are an entity and own substantial parcels of land, much of which you have owned since before 1 July 2000.

You owned parcels of land which were subdivided and portions sold off since 1 July 2000 including the relevant period.

You contend that:

You advise that:

To your application for private ruling you have attached and marked as:

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Division 75

Taxation Administration Act 1953

Reasons for decision

Question 1

Summary

We have concluded that each lot of land, the subject of this ruling and referred to as the Properties, is land on which there are no improvements as at 1 July 2000 for the purposes of Division 75, therefore , Item 4 of the table in paragraph 75-10(3)(a) applies.

Detailed reasoning

The Commissioner accepts that local government councils can apply item 4 of the table in subsection 75-10(3), where relevant.

The Commissioner has provided clarification on the meaning of the phrase "land on which there are no improvements" in Goods and Services Tax Ruling GSTR 2006/6 Goods and services tax: improvements on the land for the purposes of Subdivision 38-N and Division 75 (GSTR 2006/6).

It is important to consider the view outlined in GSTR2006/6 in its entirety in order to determine the Commissioner's view on what constitutes improvements on the land. The premise of the Commissioner's view is outlined at paragraph 20 which states:

In relation to any improvements on the land from the land's natural state GSTR 2006/6 follows the principle established by High Court in Morrison v. Federal Commissioner of Land Tax (1914) 17 CLR 498 and states at paragraph 22:

Paragraph 23 of GSTR 2006/6 provides that where there have been a number of human interventions on the land it is necessary to establish whether any one of the human interventions enhances the value of the land at the relevant date. Whether the net value of the human interventions enhances the overall value of the land is irrelevant.

Paragraph 25 of the ruling provides a list of examples of human interventions which may enhance the value of land that includes:

You have stated that the aerial photograph, marked as Annexure D has been taken in June 1999. It shows that the en globo land prior to the subdivision and sale of the Properties in a predominantly natural virgin state and in very similar condition to the greater land surrounding it. There appears to be some evidence of fire breaks or naturally formed trails. We cannot conclude that the trails have been created by human intervention, nor can we conclude that these trails and fire breaks have enhanced the value of the land.

Marked as Annexure D1, is a photograph taken in December 2013 which shows six of the lots in question still in a predominantly natural virgin state and in very similar condition to the greater land surrounding them. From the slow pace of development between the dates of the photographs, it is reasonable to conclude that, as at 1 July 2000, the en globo land was in the same condition as that shown in the June 1999 photograph.

On the basis of the information and evidence submitted it is reasonable to conclude that there are no human interventions on the en globo land that has enhanced the value of the land as at 1 July 2000. Therefore the en globo land, prior to the subdivision and sale of the Properties which are the lots the subject of this ruling, is land on which there are no improvements as at 1 July 2000.

Question 2

Summary

You have used the unimproved capital value for rating or land tax purposes as the basis for valuation and therefore have satisfied the requirements of MSV 2005/3 and MSV 2009/1, as the case may be, for each lot.

Consequently, you are entitled to a refund of overpaid GST.

Detailed reasoning

As you have already advised that there have been improvements on each lot of land as at the day on which the taxable supply had taken place, subsection 75-10(3A) provides that the valuation of each lot is to be made as if there are no improvements on the day the taxable supply takes place for each lot.

You have chosen Method 3, in accordance with both margin scheme determinations MSV 2005/3 and MSV 2009/1 as the case may be for the Properties, for valuation purposes. Consequently you have used your rating value which is also the value for land tax purposes and is the unimproved capital value for each individual allotment in question. The date of valuation for each lot was a date and this date precedes the valuation dates for all of the allotments in question, being the respective dates of the taxable supplies.

Your valuations therefore comply with the requirements determined by the Commissioner under subsection 75-35(1) and are therefore approved valuations for the purposes of Division 75.

Regarding the overpayment of GST, paragraphs 25B and 84 of Miscellaneous Tax Ruling MT 2010/1: restrictions on GST refunds under section 105-65 of Schedule 1 to the Taxation Administration Act 1953 (MT 2010/1) state:

Because you calculated GST as 1/11th of consideration received you made an error in the calculation of GST payable and, in accordance with MT 2010/1, section 105-65 of Schedule 1 to the Taxation Administration Act 1953 (TAA) will not apply.

You subsequently calculated the correct margin as the difference between the consideration received and the valuation of each individual lot as outlined in your Annexure A and the total of all margins is $. The GST payable should have been of 1/11th of $ being $. You incorrectly calculated and paid GST of $ and thus the overpaid GST amount is $. As section 105-65 of Schedule 1 to the TAA does not apply, you are entitled to a refund of overpaid GST of $ in this case.


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