Private ruling: Eligibility for the margin scheme
Published: May 2012

Ruling: Q1: Are the supplies by Entity A and Entity Z, collectively or individually, of the real property being: Property 1 Property 2, and Property 3. ineligible for the margin scheme in accordance with Division 75 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act? | A1: No

Relevant facts and circumstances: You (BAE) are the GST group representative for Entity A and Entity Z. Entity A was previously named ABC Pty Ltd. Entity B was previously named XYZ Pty Ltd. Entity A and Entity Z held the relevant properties at the time that they became part of the GST group. Entity A and Entity Z are parties to a draft Contract of Sale of Real Estate. You provided a copy of the draft contract as at ddmmyyyy. The property listed in the draft sale document is the land described in the current certificates of title. A clause of the draft contract states: · The parties agree that the Margin Scheme will apply in working out the amount of GST on the Taxable Supply of the Property if, within 10 Business Days after the date of this Contract, the Purchaser gives written notice to the Vendor requesting that the Margin Scheme apply in respect of the supply of the Property under this Contract. · The request (and agreement in writing) to apply the Margin Scheme will be made prior to settlement. · You provided various documents which show that ABC Pty Ltd owned properties 1 and 2 prior to 1 July 2000. ABC Pty Ltd is now Entity A. · You provided various documents which show that XYZ Pty Ltd owned property 3 prior to 30 June 2000. XYZ Pty Ltd became Entity Z.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Division 75 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 75-5(3)

Reasons for decision: Summary: Under Division 75 of the GST Act, the margin scheme applies in working out the amount of GST payable on a taxable supply of real property if: the supplier and the recipient of the supply agree in writing that the margin scheme is to apply, and the agreement to use the margin scheme is made on or before the making of the supply, or within such further period as the Commissioner allows, and the supplier did not acquire the freehold interest through a supply that was ineligible for the margin scheme. Subsection 75-5(3) of the GST Act states the circumstances under which a supply is ineligible for the margin scheme. As Entity A and Entity Z are members of a GST group, the most relevant provision is paragraph 75-5(3)(c) of the GST Act which deals with disposals by GST group members. However, neither Entity A nor Entity Z was a GST group member when they acquired their interests in the relevant properties. Therefore, paragraph 75-5(3)(c) of the GST Act will not apply. In the circumstances outlined, no other provision in section 75-5 of the GST Act operates to make the supply of the relevant properties by Entity A and Entity Z ineligible for the margin scheme. Therefore, the supply of the relevant properties by Entity A and Entity Z, collectively or individually, will not be ineligible for the margin scheme to apply.

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