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ARTICLE · 24 FEBRUARY 2009

Applying The Margin Scheme? Make Sure Your Valuer Dots The “i’s” & Crosses The “t’s”!

Moore Australia
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A recent Federal Court decision has highlighted the need for property developers to ensure that if they are going to apply the margin scheme, they had better do it right.

AustraliaReal Estate and Construction
Stephen Rosenstrauss
Stephen Rosenstrauss
Sandra Felli
Sandra Felli
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A recent Federal Court decision has highlighted the need for property developers to ensure that if they are going to apply the margin scheme, they had better do it right.

In the first Brady King case 1 , the taxpayer succeeded in the Full Federal Court in its quest to be allowed to apply the margin scheme to determine its GST liability on the sale of strata units. The margin scheme was allowed even though the company, at 1 July 2000 had only entered into a contract to purchase a building. At that date, it had not received development approval to convert the office building to residential strata title apartments, commenced construction or even completed the building acquisition.

The Full Federal Court held that this was the type of arrangement contemplated by the legislation relating to the margin scheme. In particular it held that the rights held by the taxpayer at 1 July 2000 under the incomplete contract were sufficient to allow it to apply the margin scheme. The

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