Edited version of private advice

Authorisation Number: 1051808580442

Date of advice: 16 April 2021

Ruling

Subject: GST and eligibility to use the margin scheme

Question

When you make a taxable supply in the sale of each of the subdivided residential lots subdivided from your property located at the specified address(es) (the Subdivided Lots), will the margin scheme apply in working out the amount of GST payable on the sale under Division 75 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act)?

Answer

Yes, when you make a taxable supply in the sale of each of the Subdivided Lots, you may apply the margin scheme in working out the amount of GST payable on the sale under Division 75 of the GST Act. This is because you satisfy the requirements of eligibility to use the margin scheme.

However, this is provided you and the recipient (purchaser) have agreed in writing that the margin scheme is to apply before making the supply.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

In your capacity as an individual/sole trader, you are

• registered with an ABN from ddmmyyyy to current date
• registered for GST from ddmmyyyy to current date

You were also a partner in the partnership of a specified name (the Partnership). The Partnership was

• registered with an ABN from ddmmyyyy to ddmmyyyy
• registered for GST from 1July ddmmyyyy to ddmmyyyy

In yyyy, you and your then wife Ms A purchased in partnership approximately over n acres of specified crop (the Property). Ownership was joint tenancy. The whole of the Property was used for the vineyard business.

The document headed Family Law Act 1975 includes the following:

• In the Magistrates' Court between:

Applicant's name Applicant

and

Respondent's name Respondent

• Orders made before his worship ...on the dd Day of month yyyy. By consent it is ordered

1.         THAT on or before dd Month yyyy the husband pay to the wife the sum of $x ("the payment").

2.            THAT contemporaneously with the payment the wife transfer to the husband all her interest in the real property known as the specified address.

...

5.            THAT the horticultural partnership of the parties be deemed to be dissolved as and from receipt of the final proceeds of the yyyy crop...

...

You have clarified and confirmed that the address of the property referred to as the specified address as recorded at item 2 of the consent order made in yyyy was the address of the Property at that time and the address has subsequently changed to and known as the current specified address.

When you have acquired the entire interest in the Property, you were registered as the sole proprietor of the property as shown on the Title Search document, which includes:

• Certificate of Title: Volume xxxxx Folio xxx
• Sole proprietor: your name ...dd/mm/yyyy
• Land description: Lot n on Plan of Subdivision xxxxxxx
• Street address: specified address

At the time you acquired the interest in the Property,

• the whole of the Property was still being used in the specified crop business
• no other enterprise was being carried on from the Property other than the specified crop operation
• a specified structure and a house existed on the Property. The house was later subdivided from the Property leaving approximately n acres of farmland.

As a sole trader, you continued to operate the specified crop business up until ddmmyyyy. The specified crop was subsequently cleared, and the land subdivided into n residential house blocks/the Subdivided Lots.

• The Subdivided Lots (together with the adjoining land of n other landowners who are also developing their land) are collectively known as the specified estate
• No contract of sale on any of the Subdivided Lots has been executed or prepared.
• A draft copy of a sale contract is provided

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 paragraph 9-5(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-5(b)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 75-5(1)(a)

A New Tax System (Goods and Services Tax) Act 1999 subsection 75-5(1A)

A New Tax System (Goods and Services Tax) Act 1999 subsection 75-5(2)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 75-5(3)(a)

A New Tax System (Goods and Services Tax) Regulations 2019 Regulation 40-5.09(1)

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