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Edited version of your written advice
Authorisation Number: 1051334553419
Date of advice: 26 February 2018
Ruling
Subject: GST and contra supplies under a development lease arrangement
Question 1
Will Entity A make taxable supplies to Entity B pursuant to the Development Agreement?
Answer
Yes, Entity A will make taxable supplies of development services to Entity B.
Question 2
Will Entity A make creditable acquisitions from Entity B pursuant to the Development Agreement?
Answer
Yes, Entity A will make creditable acquisitions of land from Entity B provided:
● Entity B does not apply the margin scheme in working out the GST on their supplies of land;
● Entity A does not acquire the land in order to make input taxed supplies.
Question 3
What is the consideration for Entity A’ supplies of development services?
Answer
Pursuant to section 9-75 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), the consideration for the development services provided by Entity A to Entity B is equal to the GST- inclusive market value of the land.
Question 4
In which tax period is the GST on Entity A’ supplies of development services and input tax credit for their creditable acquisition of the land from Entity B attributable?
Answer
The GST on Entity A’ supplies of development services is attributable to the tax period in which the reciprocal tax invoices for the relevant stage are issued.
The input tax credits for Entity A’s acquisition of the land from Entity B is attributable to the tax period in which the reciprocal tax invoices (including any Recipient Created Tax Invoices issued to Entity B by Entity A) for the relevant stage are issued.
Question 5
Will an adjustment event arise under Division 19 of the GST Act if, at the time of granting final tenure, the GST-inclusive market value of the parties respective supplies has changed from the value already determined by the parties?
Answer
No.
Question 6
Will Entity A provide any non-monetary consideration for Entity B’s supply of two specified sites?
Answer
Yes.
Question 7
For the purposes of subsection 75-5(1A)(a) of the GST Act when will the supplies of the land from Entity B to Entity A be made?
Answer
The supplies of the land from Entity B to Entity A will be made at settlement for each of the stages.
Question 8
Assuming the answer to question 6 is yes, to which tax periods is the GST payable in respect of Entity A’s taxable supplies of development services and input tax credit for its creditable acquisition of the land in relation to the two specified sites attributable?
Answer
In relation to the two specified sites, the GST on Entity A’s taxable supplies of the development services is attributable to the tax period in which the reciprocal tax invoices for the relevant stage are issued.
The input tax credits for Entity A’s acquisition of the land from Entity B is attributable to the tax period in which the reciprocal tax invoices (including any Recipient Created Tax Invoices issued to Entity B by Entity A) for the relevant stage are issued.
Question 9
Assuming the answer to question 6 is yes, can Entity A determine the GST-inclusive value of its supplies of development services in relation to the two specified sites with reference to the GST-inclusive market value of these sites at the date of early freehold transfer?
Answer
Yes.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5
A New Tax System (Goods and Services Tax) Act 1999 Section 9-15
A New Tax System (Goods and Services Tax) Act 1999 Section 9-70
A New Tax System (Goods and Services Tax) Act 1999 Section 9-75
A New Tax System (Goods and Services Tax) Act 1999 Section 11-5
A New Tax System (Goods and Services Tax) Act 1999 Section 11-10
A New Tax System (Goods and Services Tax) Act 1999 Section 29-5
A New Tax System (Goods and Services Tax) Act 1999 Section 29-10
A New Tax System (Goods and Services Tax) Act 1999 Section 75-5
A New Tax System (Goods and Services Tax) Act 1999 Section 75-10
A New Tax System (Goods and Services Tax) Act 1999 Section 75-11
A New Tax System (Goods and Services Tax) Act 1999 Section 195-1
A New Tax System (Goods and Services Tax) Act 1999 Division 19
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