Edited version of private ruling

Authorisation Number: 1011893776698

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Ruling

Subject : GST refund - overpayment of GST on supplies of real property

Question 1

Is the entity entitled to calculate the margin for supplies of real property according to the valuation method in subsection 75-10(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Yes.

Question 2

Is the Notification of entitlement to GST refund a valid notification according to the requirements of section 105-55 of Schedule 1 to the Taxation Administration Act 1953 (TAA)?

Yes

Question 3

Is the valuation of the interest in the relevant real property accepted?

Yes

Relevant facts and circumstances

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The entity lodged a notification of entitlement to GST refund in respect of an overpayment of GST on supplies of real property.

The Australian Taxation Office (ATO) acknowledged receipt of the notification and confirmed that it was made within the appropriate time.

The entity provided a valuation to the ATO in respect of the relevant property.

The valuation was submitted to the Australian Valuation Office (AVO).

The AVO responded that while the valuation was on the high end of the range it was within reasonable limits.

Reasons for decision

Question 1

Summary

The ATO revised its position on the matter of the interest held by the supplier of real property at the time it enters into a contract for the acquisition of that property following the decision of the Full Federal Court in Brady King Pty Ltd v Commissioner of Taxation [2008] FCAFC 118.

Detailed reasoning

In considering the refund claims, we note that subsequent to the Full Federal Court decision in Brady King Pty Ltd v Commissioner of Taxation [2008] FCAFC 118 (Brady King) it is not in dispute that the entity is entitled to calculate the margin for the supplies using the valuation method as described in subsection 75-10(3) of the GST Act. The ATO accepts the Court decision as authority for the proposition that, for the purposes of section 75-10 and section 75-11 of the GST Act, an entity supplying relevant property is taken to have held or acquired a sufficient interest in that property at the time it enters into, but has not completed, a contract for the acquisition of that property.

Accordingly, the entity is entitled to calculate the margin on the supplies of real property using the valuation method in subsection 75-10(3) of the GST Act.

Question 2

Summary

The valuation is accepted. The AVO has confirmed that the valuation is within reasonable limits.

Detailed reasoning

The valuation provided was submitted to the AVO, whose report confirmed that the valuation as submitted was towards the higher end of the range but was within reasonable limits.

Accordingly, the valuation is accepted and the entity is entitled to use this valuation in the calculation of the margin on the relevant supplies of real property.

Question 3

Summary

The notification of entitlement to GST refund is a valid notification according to the requirements of section 105-55 of Schedule 1 to the TAA.

Detailed reasoning

The notification of entitlement to a GST refund has been accepted as a valid notification by which the entity has preserved its entitlement to a refund outside of the four year time limit imposed by section 105-55 of Schedule 1 to the TAA.