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Edited version of private ruling
Authorisation Number: 1011696270437
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Ruling
Subject: Valuation for Margin Scheme
Question 1
For the purpose of calculating the margin are you allowed to use the date specified under item 4 of the table in subsection 75-10(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No, you are not allowed to use the date specified under item 4 of the table in subsection 75-10(3) of the GST Act to calculate the margin. You must use either the valuation date specified in item 1 or item 3 depending on your circumstances.
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.
You are a local government entity.
You are registered for the goods and services tax (GST).
You purchased land before 1 July 2000.
The site was used as a business for many years and when that enterprise ended several years after, it was not used for any purpose.
Various proposals were considered for the use of the land since then and you have now decided to dispose of it by way of outright sale or long term lease.
Depending on the viability and council decision, you may undertake the subdivision of the property for subsequent sale or sell the property as is for the purchaser to develop the land according to council approval.
You wish to apply the margin scheme for this supply.
Reasons for decision
The amount of GST payable on taxable supplies is specified under section 75-10 of the GST Act. Subsection 75-10(3) of the GST Act states that if the circumstances specified in an item in the second column of the table in this subsection apply to the supply, and an approved valuation as at the date specified under that item has been made, then the margin for the supply is the amount by which the consideration for the supply exceed that valuation.
Item 4 of the table in subsection 75-10(3) of the GST Act applies where the supplier is the Commonwealth, a State or a Territory only. Goods and Services Tax Ruling GSTR 2006/5 (GSTR 2006/5) provides the meaning of 'Commonwealth, a State or a Territory'. Paragraph 13 of GSTR 2006/5 states:
Local governments are not a State or Territory. A local government performs its functions independently of, and not as an instrument of, the State. It neither operates solely in the interests of the State, nor is controlled by the State, but is an autonomous body, separate from the State.
You are a local government entity and not a State or a Territory. Therefore, you are precluded from using the valuation date specified in item 4 of the table in subsection 75-10(3) of the GST Act. As you have acquired the property prior to 1 July 2000, the valuation of the property would fall within the scope of either item 1 or item 3 of the table in subsection 75-10(3) of the GST Act, both of which is 1 July 2000.
Goods and Services Tax Ruling GSTR 2006/7 (GSTR 2006/7), provides information about how the margin scheme applies to a supply of real property made on or after 1 December 2005 that was acquired or held before 1 July 2000.
We have enclosed copies of GSTR 2006/5 and GSTR 2006/7, for your information.