Private ruling: GST - margin scheme
Date of advice: 8 July 2025
Published: 1 September 2025
Ruling period: Years ended DDMMYYYY to DDMMYYYY
Date scheme commenced: DDMMYYYY

Ruling: Q1: When you, sell each of the new residential apartments located at (the Properties), will xx be eligible to apply the margin scheme in working out the amount of GST payable on each supply under Division 75 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act)? | A1: Yes, the Commissioner of Taxation (the Commissioner) considers that pursuant to Division 75 of the GST Act, when you sell each of the Properties xx will be eligible to apply the margin scheme in working out the amount of GST payable on each supply. This is provided that • the supply is a taxable supply (the facts state that a taxable supply is intended to be made ) • You and the purchaser have agreed in writing, on or before the making of the supply, or within such further period as the Commissioner allows, that the margin scheme is to apply . | Q2: If the answer to Question 1 is 'yes', can xx choose to apply an approved valuation to work out the margin for the supply under subparagraph 75-11(5)(e)(i) of the GST Act with the applicable date of valuation being as at DDMMYY? | A2: Yes, you can choose to apply an approved valuation to work out the margin for the supply under subparagraph 75-11(5)©(i) of the GST Act. We consider the facts of your case indicate that paragraphs 75-11(5)(a), (b) and (c) were satisfied: • You acquired the property located at (the Property) on DDMMYY from the (the Original Vendor) as a GST-free supply of a going concern - paragraph 75-11(5)(a) was satisfied. • The Original Vendor was registered for GST since DDMMYY (that is, registered for GST at the time you acquired the Property) - paragraph 75-11(5)(b) was satisfied. • The Commissioner considers subsections 75-11(1) to (4) do not apply to the facts of your case - paragraph 75-11(5)(c) was satisfied. Subparagraph 75-11(5)(e)(i) was satisfied as the Original Vendor • acquired the Property on DDMMYY (that is, acquired after 1 July 2000), and • was registered for GST since DDMMYY (that is, registered for GST at the time of its acquisition of the Property in mmyyyy, and • acquired the Property for the purchase price of $XX (that is, the acquisition was for consideration) Accordingly, the Commissioner considers you can choose to apply an approved valuation to work out the margin for the supply. The margin for the supplies that you make in relation to the new residential apartments will be the amount by which the consideration for the supplies exceeds the approved valuation of the Property as at the day on which the Original Vendor had acquired it (that is, DDMMYY). XX will need to apportion the valuation of the Property to ascertain the part of the valuation that relates to each of the new residential premises using a fair and reasonable method of apportionment. | Q3: If the answer to question 2 is 'yes', is the valuation xx have obtained considered to be an 'approved valuation' pursuant to section 75-35 of the GST Act? | A3: Yes, the valuation xx have obtained from XX issued on DDMMYY (the New Valuation) is an approved valuation pursuant to section 75-35 of the GST Act. The Commissioner has taken into consideration the following: • The requirements for making valuations for the purposes of applying the margin scheme in Division 75 of the GST Act as set out in MSV 2020/1 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 XX review of the New Valuation, and their advice dated DDMMYY included the following conclusions: "We are of the view the XX Report does comply with the Commissioner's requirements under MSV 2020/1..." "We have concluded the XX Valuation dated DDMMYY having regard to the conditions in MSV 2020/1 is an approved valuation."

Relevant facts and circumstances: 1. XX (XX) is a subsidiary of a global engineering, property and infrastructure group which is head quartered in Country A. (ii) XX was incorporated on DDMMYY and has operated in Australia since this time predominately focused on residential developments. (iii) Under ABN XX, XX is registered for GST and has been since DDMMYY. 2. On DDMMYY, XX applied to the Commissioner for a private ruling on the following: Question 1 When, XX, sell each of the new residential apartments located at XX (the Properties), will you be eligible to apply the margin scheme in working out the amount of GST payable on each supply under Division 75 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act)? Question 2 If the answer to Question 1 is 'yes', can you choose to apply an approved valuation to work out the margin for the supply under subparagraph 75-11(5)(e)(i) of the GST Act with the applicable date of valuation being as at DDMMYY Question 3 If the answer to question 2 is 'yes', is the valuation you have obtained considered to be an 'approved valuation' pursuant to section 75-35 of the GST Act? 3. XX acquired the property located at XX Certificate of Title Volume number XX Folio number xx (the " Property "). The details of the transaction include the following: (i) The Contract of Sale of Real Estate (the " Sale Contract ") was executed on DDMMYY and the sale/purchase settled on DDMMYY. (ii) The purchase price for the Property was $xx. The Property was supplied as a GST-free supply of a going concern. This was agreed in writing between the parties as part of the Sale Contract. (iii) The relevant enterprise supplied as part of the going concern was a leasing enterprise. That is, the Property was being used as commercial premises and supplied subject to the leases as shown in the table below. Table 1: Leases represented all of the lettable area of property L Lessee Lease Start Lease End Comments xx date date This lease had become a periodic tenancy from date until settlement. From settlement, xx executed a new lease with this lessee to date. xx date date From settlement, xx executed a new lease with this lessee to date. The above leases represented all of the lettable area of the Property. That is, there were no vacant areas of the Property that were not being leased as at the time of settlement. 4. The vendor was xx (the " Original Vendor "). (i) The Original Vendor (ABN: number x) is registered for GST and has been since DDMMYY. (ii) XX and the Original Vendor are unrelated parties and for the avoidance of doubt are not 'associates' nor have ever been members of the same GST group or participants in a GST joint venture. (iii) The Original Vendor had acquired the Property for a purchase price of $X pursuant to a contract dated DDMMYY. The settlement date was DDMMYY. (iv) The Property was supplied to the Original Vendor as a GST-free supply of a going concern. 5. Xx acquired the Property with the intention of undertaking a development that is currently anticipated to comprise of approximately number x new residential apartments as well as some retail facilities (the " Development "). 6. As part of the Development feasibility, XX engaged XX (the " Valuer ") to provide a market valuation of the Property as at DDMMYY for margin scheme determination purposes. The details of this engagement include the following: (i) On DDMMYY, the Valuer reported that the market value of the Property as at DDMMYY (the sale contract date when the Original Vendor purchased the Property) was $x (exclusive of GST). (ii) On DDMMYY, the Valuer reported in an addendum that the market value of the Property as at DDMMYY (the settlement date when the Original Vendor purchased the Property) was $x (GST exclusive). 7. On DDMMYY, (i) XX requested a private ruling be issued answering Questions 1 and 2 only, with Question 3 to be answered separately at a later date. (ii) XX requested the Commissioner to source an independent valuer to undertake a review of the valuation prepared by the Valuer. Independent valuer XX reviewed the Valuer's valuation report and provided their advice dated DDMMYY, which includes the following: "...we are of the view the XX Letter does not comply with the Commissioner's requirements under MSV 2020/1 Method 1 Valuation by Professional Valuer Section number points number - number. In particular points number and number have not been met in full." 8. On DDMMYY, a private ruling answering the first number questions was issued under authorisation number xx. 9. On DDMMYY, xx advised the Commissioner that the Original Vendor named in the private ruling dated DDMMYY was incorrect and xx requested the ruling be updated to reflect the correct entity, name. Xx and the Commissioner agreed that once the answer to Question 3 was ready, the Commissioner would replace the original ruling and include the details of the correct 'Original Vendor' in the revised ruling. 10. XX engaged the Valuer to undertake a new valuation (the" New Valuation "). On DDMMYY XX provided to the Commissioner a copy of the valuation report on the New Valuation dated DDMMYY. XX engaged independent valuer XX to critique the valuation report on the New Valuation. On DDMMYY the Commissioner received from XX a copy of their advice dated DDMMYY, which includes the following: "We have concluded the XX Valuation dated DDMMYY having regard to the conditions in MSV 20XX/1 is an approved valuation." 11. XX confirms as a fact that a taxable supply is intended to be made in relation to the sale of each of the new residential apartments once developed. 12. Where eligible to be applied, XX intends to agree in writing with each prospective purchaser to calculate the GST liability on the supply of the new residential premises under the margin scheme. 13. Where required, XX will apportion the valuation for the Property to individual sales of new residential premises in the Development using a fair and reasonable method of apportionment.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 Division 75 | A New Tax System (Goods and Services Tax) Act 1999 Subdivision 38-J | A New Tax System (Goods and Services Tax) Act 1999 section 195-1