Private ruling: Margin scheme
Date of advice: 12 March 2026
Published: 4 May 2026
Ruling period: Month ended 31 July 20YY

Ruling: Q1: Does the Commissioner accept that the supply of the Land is eligible for the margin scheme to apply pursuant to section 75-5 of the A New Tax System (Goods and Services Tax Act) 1999 (GST Act)? | A1:  | Q2: If the answer to Question 1 is yes, were YYYY and XXXX "associates" for the purposes of paragraph 75-5(3)(g) of the GST Act? | A2:  | Q3: Does the Commissioner accept that the margin on the supply is calculated pursuant to subparagraph 75-11(6)(g)(i) or subparagraph 75-11(6)(g)(iii) of the GST Act? | A3:  | Q4: Does the Commissioner confirm the valuation provided for the purpose of calculating the margin under section 75-35 of the GST Act is appropriate? | A4: 

Relevant facts and circumstances: Relevant parties YYYY was established by the YYYY Actfor a public purpose and was a State Government Statutory Authority. YYYY was abolished on commencement of the XX Act. YYYY was registered for GST from DD MMM YYYY to DD MMM YYYY. XXXX was established by the XX Act as a corporation solely constituted by the Minister administering the XX Act. XXXX is registered for GST from DD MMM YYYY. AAAA is registered for GST from DD MMM YYYY. The land The land, subject of this application, was created under a subdivision on DD MMM YYYY. Historically: • The Original property was acquired by YYYY from on DD MMM YYYY, pursuant to a Transfer Notice made by the Treasurer and a Minister pursuant to the TT Act. - The Transfer Notice provided: o for the transfer from ZZZZ to YYYY, all ZZZZ's right, title and interest. o for the transfer from ZZZZ to YYYY, all the rights and obligations in respect of indebtedness of ZZZZ. o that consideration is equal to the book value of assets and liabilities of ZZZZ as recorded in the accounts of ZZZZ prior to the transfer and designated as a distribution to, or contribution by, the State of XXX by way of adjustment against contributed equity. - The transfer was registered on DD MMM YYYY with the StateTitles Office. • The Original property was vested in XXXX from YYYY on commencement of the XX Act on DD MMM YYYY. - No consideration was given by XXXX to YYYY for the vesting of YYYY's assets, including The Original property. - Under the XX Act, the assets and liabilities immediately before commencement became the assets and liabilities of XXXX. - The transfer was registered with the State Titles Office on DD MMM YYYY. • The Original property was further subdivided resulting in the Land being created under a subdivision. The contract AAAA entered into a contract for the acquisition of the Land from XXXX. Title of the Land was transferred to AAAA on DD MMM YYYY. Valuation AAAA obtained a valuation of the Land a professional valuer for a retrospective valuation of the Land assessed as at DD MMM YYYY. The valuation report was issued on DD MMM YYYY.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Division 9 | A New Tax System (Goods and Services Tax) Act 1999 Division 72 | A New Tax System (Goods and Services Tax) Act 1999 Division 75 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision: Detailed Reasoning - Detailed reasoning: The supply of the Land is a taxable supply of real property under section 9-5. Subsection 75-5(1) states that the margin scheme applies in working out the amount of GST on a taxable supply of real property made by selling a freehold interest in land and where the parties have agreed in writing that the margin scheme would apply. Both conditions have been met. However, subsection 75-5(2) creates an exclusion for the ability to apply the margin scheme if you acquired the entire freehold interest through a supply that was ineligible for the margin scheme. Subsection 75-5(3) specifies which supplies are ineligible for the margin scheme. The wording of subsection 75-5(2) demonstrates that if XXXX acquired the land through a supply that was ineligible for the margin scheme, then the margin scheme cannot be applied to the sale of the Land. Thus, the first question is whether the acquisition by XXXX from YYYY was a supply as defined within section 9-10, and if so, whether that was an ineligible supply. Subsection 9-10(1) defines a supply as: A supply is any form of supply whatsoever. Further clarification is given in subsection 9-10(2). Relevantly, paragraph 9-10(2)(d) states in relation to real property: Without limiting subsection (1), supply includes any of these: ... (d) a grant, assignment or surrender of real property. Goods and Services Tax RulingGSTR 2006/9 Goods and services tax: Supplies (GSTR 2006/9), provides further detail on where there may be a supply as defined within section 9-10. When considering a situation where land is acquired through the operation of legislation or compulsory acquisition, it states at paragraph 76: 76. While an entity may make a supply by observing an obligation, even if that involves no more than refraining from doing something or tolerating some act or situation, there will be no supply where something occurs by operation of law without an entity providing something or without any obligation being placed on the entity to provide something. Paragraph 82 of GSTR 2006/9 further states: 82. The effect of the gazettal notice is that the legal ownership of the land, described in the notice, is vested in the authority acquiring the land, and that the land becomes freed from any other interests. The entity's interest in the land, whether legal or equitable, is extinguished. When land vests in an authority in consequence of a gazettal notice, it is necessary to examine the relevant facts and circumstances to determine whether or not the owner makes a supply of the land to the authority. In cases where land vests in the authority as a result of the authority seeking to acquire the land, and initiating the compulsory acquisition process pursuant to its statutory right, then the owner does not make a supply. This is because the owner does not provide anything to the authority. It takes no action to cause its legal interest to be transferred or surrendered to the authority. It has no obligation to do anything, to refrain from doing something or to tolerate an act or situation. Regarding the acquisition by XXXX from YYYY, the Original property was vested in XXXX from YYYY on commencement of the XX Act. YYYY did not provide anything or have any obligations and XXXX was under no obligation to provide anything to YYYY, which had ceased to exist. Therefore, there was no supply, taxable or otherwise, of the Original property by YYYY to XXXX. Consequently, XXXX did not acquire the Original property as a taxable supply on which GST was worked out without applying the margin scheme and the conditions of paragraph 75-5(3)(a) are not satisfied. Similarly, none of the conditions in paragraphs 75-5(3)(b) to 75-5(3)(g) are satisfied, as there was no supply, taxable or otherwise, when acquiring the Original property from YYYY. Therefore, the margin scheme may be applied on the supply of the Land under section 75-5 to bring within the GST system the taxable supply of the Land. | Detailed Reasoning - Question 2: If the answer to Question 1 is yes, were YYYY and XXXX "associates" for the purposes of paragraph 75-5(3)(g) of the GST Act? | Detailed Reasoning - Detailed reasoning: For the purposes of the GST Act, the term "associate" has the meaning given to that term by section 318 of the Incomes Tax Assessment Act 1936 . Both YYYY and XXXX were statutory bodies and not companies at the time of transfer, so the definition of associates within subsection 318(2) of the Income Tax Assessment Act 1936 cannot be relied upon. However, subsection 75-11(8) broadens the definition of associates within the specific context of subsection 75-5(3): (8) Subsection (6) or (7) applies to an acquisition through a supply made by: ... (c) a government entity of a kind referred to in section 72-95 or 72-100; as if Subdivision 72-D affected the operation of that subsection in the same way that it affects the operation of Division 72. Subsection 72-100(1) deems government entities that are an organisation established by a State or Territory, of a kind referred to in paragraph (e) of the definition of government entity in section 41 of the A New Tax System (Australian Business Number) Act 1999 (ABN Act), to be associates of every other Department of that State or Territory or organisation, established by that State or Territory. Paragraph 41(e) of the ABN Act relevantly defines government entity as an organisation that: (i) is not an entity (i.e., a company, trust, partnership etc); and (ii) is either established by the Commonwealth, a State or a Territory (whether under law or not) to carry on an enterprise or established for a public purpose by an Australian law; and (iii) can be separately identified by reference to the nature of the activities carried on through the organisation or the location of the organisation, whether or not the organisation is part of a Department. Both YYYY and XXXX were not entities, as defined, were established by the State as statutory bodies constituted under State legislation and also separately identifiable with their own mandate and departmental and Ministerial reporting. Thus, the definition of government entity within section 41 of the ABN Act has been met and YYYY and XXXX will be associates under the definition of subsection 75-5(3)(g) and XXXX acquired its interest in the Land from an associate. | Detailed Reasoning - Further information: As established in the reasoning under Question 1, the acquisition of the interest in The Original property by XXXX from YYYY was not a supply. Paragraph 75-5(3)(g) is about a supply in relation to which you acquired an interest from an entity who was your associate. The provisions will not be relevant because the acquisition was not made through a supply, taxable or otherwise. | Detailed Reasoning - Question 3: Does the Commissioner accept that the margin on the supply is calculated pursuant to subparagraph 75-11(6)(g)(i) or subparagraph 75-11(6)(g)(iii) of the GST Act? | Detailed Reasoning - Detailed reasoning: Section 75-10 provides that, subject to subsection 75-10(3) and section 75-11, the margin for the supply is the amount by which the consideration for the supply exceeds the consideration for the acquisition of the interest in question. If a particular circumstance outlined in section 75-11 applies, then the margin is to be calculated under section 75-11 without a need to refer to subsection 75-10(3). The subsections within section 75-11 are to be tested sequentially. In terms of the facts around the acquisition of the property by XXXX from YYYY, subsections 75-11(1) through to (5) will not apply. Subsection 75-11(6) is about the margin for the supply of real property acquired from an associate. For the same reasoning provided above, XXXX and YYYY are considered associates within the specific context of subsection 75-11(6). Where none of paragraphs 75-11(6)(a) to (e) apply, the margin for the supply is the amount by which the consideration for the supply exceeds the value of the property set out in either paragraphs (f), (g) or (h), to be applied sequentially. Subsection 75-6A further provides that paragraphs (6)(c) and (d) to not apply if the acquisition from your associate was not by means of a supply by your associate. Applying the circumstances of the acquisition of the interest by XXXX to subparagraphs 75-11(6)(a) to (e): (a) As YYYY was registered for GST at the time of the transfer of the interest, paragraph 75-11(6)(a) is met. (b) There was no legal right to consideration payable when XXXX acquired the interest. Thus paragraph 75-11(6)(b) is met. (c) The acquisition of The Original property by XXXX from YYYY was not a supply. Thus paragraph 75-11(6)(c) does not apply because of the exclusion under subsection 75-5(6A). (d) The acquisition of The Original property by XXXX from YYYY was not a supply. Thus paragraph 75-11(6)(d) does not apply because of the exclusion under subsection 75-5(6A). (e) None of subsections (1) to (5) applies. Thus paragraph 75-11(6)(e) is met. As the provisions of subsection 75-11(6) have been met, the margin for the supply is the amount by which the consideration for the supply exceeds the value of the property set out in either paragraphs (f), (g) or (h), to be applied sequentially. Paragraph (f) does not apply as YYYY did not acquire the interest before 1 July 2000. Where the associate acquired the interest after 1 July 2000 and was registered for GST at the time, the appropriate provision is paragraph 75-11(6)(g): (g) if your associate had acquired the interest, unit or lease on or after 1 July 2000 and had been registered or required to be registered at the time of the acquisition: (i). if your associate's acquisition was for consideration and you choose to apply an approved valuation to work out the margin for the supply - an approved valuation of the interest, unit or lease as at the day on which your associate had acquired it; or (ii). if your associate's acquisition was for consideration and subparagraph (i) does not apply - that consideration; or (iii). if your associate's acquisition was without consideration - the GST inclusive market value of the interest, unit or lease at the time of the acquisition. The meaning of consideration is defined in section 9-15 to include any payment, or any act or forbearance, in connection with a supply of anything. The transfer of the Original property from ZZZZ to YYYY was undertaken through a Transfer Notice under the TT Act, with no legal right to consideration payable. Furthermore, YYYY did not need to undertake any act of forbearance as a means of payment. Therefore, subparagraphs (1) and (ii) will not apply. Therefore, the appropriate provision that applies in determining the acquisition cost for XXXX is subparagraph 75-11(6)(g)(iii). | Detailed Reasoning - Question 4: Does the Commissioner confirm the valuation provided for the purpose of calculating the margin under section 75-35 of the GST Act is appropriate? | Detailed Reasoning - Detailed reasoning: As determined above, the calculation of the margin is to be based on subparagraph 75-11(6)(g)(iii). In this situation, the value of the acquisition is the GST inclusive market value of the interest at the time of the acquisition. The Commissioner accepts the valuation of the Land from a professional valuer, with a retrospective market valuation of the property in accordance with section 75-35. The Commissioner has taken into consideration the following: • The requirements for making valuations for the purposes of applying the margin scheme in Division 75 as set out in the determination A New Tax System (Goods and Services Tax) Act 1999 Margin Scheme Valuation Requirements Determination (MSV 2020/1), which applies to valuations for taxable supplies of property made on or after 1 March 2010. • Independent valuer's review of the Land as at DD MMM YYYY, and their advice dated DD MMM YYYY. They were specifically instructed to provide retrospective market value assessments for GST taxation purposes. • The valuation was made in accordance with the requirements of section 6 of MSV 2020/1. The valuation: - was in writing and provided by a professional valuer. - determined the market value of the interest at the valuation date. - was prepared in accordance with International Valuation Standards as adopted by the Australian Property Institute. - is considered a signed certificate which contained the relevant information set out under subsection 6(5) of MSV 2020/1 being: a) a full description of the property being valued; b) the applicable valuation date; c) the date the valuer provides the valuation to the supplier; d) the market value of the property at the valuation date; e) the valuation approach and the valuation calculation; and f) the name and qualifications of the valuer. - was not required to address subsection 6(6) as XXXX did not hold its interest in the Land before 1 July 2000. - was not made by the time specified in section 10 in that the valuation must be made by the due date for lodgment of the Business Activity Statement for the tax period to which the GST payable on the taxable supply of the real property is attributable - in this case, DD MMM YYYY. • The Commissioner may for good reason allow an additional period within which a valuation may be made. The Commissioner considers it fair and reasonable to allow an additional period up to DD MMM YYYY, being the date of issue of the valuation, within which a valuation may be made.

Answer Yes, subparagraph 75-11(6)(g)(iii) of the GST Act.