Private ruling: GST and margin scheme
Published: June 2015

Ruling: Q1: Based on the client's circumstances, is the partnership entitled to use the date they re-registered for goods and services tax (GST) as the valuation date under item 2 in the table in subsection 75-10(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for the calculation of the margin scheme in regard to the sale of property they recently made? | A1: No. Subsection 75-10(3) of the GST Act provides that if: • the circumstances specified in an item in the table in subsection 75-10(3) of the GST Act (the table) applies to the supply, and • an approved valuation of the freehold interest, stratum unit or long term lease, as at the day specified in the corresponding item in the third column of the table, has been made. the margin for the supply is the amount by which the consideration for the supply exceeds that valuation. Therefore, the date when the valuation of the interest must be made will depend on which item in the table in subsection 75-10(3) of the GST Act applies. Item 2 in the table in subsection 75-10(3) of the GST Act (item 2) provides that where the supplier acquired the interest unit or lease before 1 July 2000, but does not become registered or required to be registered until after 1 July 2000, the valuation date is the earlier of either the date of effect of the entity's registration or the day on which the entity applied for registration. That is, item 2 only applies to determine the valuation date in circumstances where the supplier was not registered or required to be registered until after 1 July 2000. In this case, the partnership was registered for GST on 1 July 2000. As such, item 2 does not apply when the partnership re-registered for GST. Item 2A in the table in subsection 38-190(3) of the GST Act (item 2A) applies where the supplier acquired the interest, unit or lease on or after 1 July 2000. As the partnership acquired the land before 1 July 2000, item 2A does not apply. Accordingly, the partnership cannot use the date that they re-registered for GST as the valuation date under item 2 when it chose to apply the margin scheme to the sale of real property acquired before 1 July 2000 because item 2 does not apply since the partnership was already registered for GST on 1 July 2000.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The entity is a partnership and owned a property in Australia from which they derive rental income. The partnership purchased the property before 1 July 2000 and was registered for the goods and services tax (GST) from 1 July 2000. The partnership cancelled their GST registration after some time because their GST annual turnover was under the GST registration threshold. The partnership recently sold the property and a registered valuation was obtained for the property. Prior to selling the property the partnership re-registered for GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Subsection 75-10(3)