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Edited version of private advice
Authorisation Number: 1051649228158
Date of advice: 19 March 2020
Ruling
Subject: GST and the margin scheme
Question
Can the Commissioner of Taxation confirm that upon sale by entity A of each new residential premise (townhouse), entity A will calculate the margin for the supply using item 2 to the table under paragraph 75-10(3) of the A New Tax System (Goods and Services Tax) Act 1999?
Answer
Yes.
As entity A acquired the interest in the Property prior to 1 July 2000 and became registered or required to be registered after this date, item 2 in the table under 75-10(3) of the GST Act applies.
This ruling applies for the following period:
1 January 2019 till quarter ending 30 June 2020
The scheme commences on:
1 January 2020
Relevant facts and circumstances
· Entity A purchased a property prior to 1 July 2000.
· At the time of acquisition the Property had an existing residential dwelling (house).
· Prior to 1 July 2000 the title over the Property was split into two separate titles and a residential unit (unit) was constructed on the second title.
· The house and the unit have both been continuously tenanted from the date of purchase and/or construction.
· In 2018 entity A submitted an application to council to alter the two existing titles into three, and construct a new residential townhouse (collectively the townhouses) on each title.
· In late 2018 through to early 2019 the planning approvals were granted, the existing dwellings (i.e. the house and unit) were demolished and construction commenced on the three townhouses.
· Entity A was registered or required to be register after 1 July 2000 and input tax credits have been claimed by entity A in respect of the development costs on a quarterly basis
· Entity A has now complete construction of the townhouses which have been or a currently being actively marketed for sale.
· Entity A has signed contracts of sale for two of the townhouses with the third townhouse still being actively marketed.
· Entity A is eligible to apply the margin scheme and under the contract for sale has (or will have) entered into a written agreement with the purchaser/s that the margin scheme applies.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 75-10(3)