Private ruling: GST and the margin scheme
Date of advice: 19 March 2020
Published: May 2020
Ruling period: 1 January 2019 till quarter ending 30 June 2020
Date scheme commenced: 1 January 2020

Ruling: Q1: 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 ? | A1: 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.

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)