Private ruling: GST and margin scheme
Date of advice: 9 July 2024
Published: 19 August 2024
Ruling period: ddmmyyyy to ddmmyyyy

Ruling: Q1: Can you use the margin scheme when you sell the townhouses located at a specified address? | A1: Yes. The townhouses are 'new residential premises' as defined in paragraph 40-75(1)(c) of the GST Act. The sales of the townhouses are taxable supplies as the sales meet all the requirements of section 9-5 of the GST Act. Based on the information provided, you can use the margin scheme in working out the amount of GST payable on the taxable supplies of the townhouses if you and the purchasers agree in writing that the margin scheme is to apply to the sales. The agreements to use the margin scheme must be made on or before the making of the supplies (or within a further period allowed by the Commissioner of Taxation).

Relevant facts and circumstances: You purchased a residential property containing an old house, at a specified address on before 1 July 20XX. The settlement took place before 1 July 20XX. You rented the property until a specified date. You demolished the old house on the property on a specified date. You subdivided the property and constructed residential townhouses on the property. The construction of the townhouses commenced on a specified date and was completed on a specified date. You have been registered for GST since a specified date and have claimed input tax credits on the construction of the townhouses. You are in the process of placing the townhouses on the market for sale.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) GST 1999 section 9-5 | A New Tax System (Goods and Services Tax) GST 1999 subsection 40-65(2) | A New Tax System (Goods and Services Tax) GST 1999 paragraph 40-75(1)(c) | A New Tax System (Goods and Services Tax) GST 1999 section 75-5 | A New Tax System (Goods and Services Tax) GST 1999 subsection 75-5(1A)