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Under the margin scheme, GST on the supply of real property is applied on the difference between the consideration for the sale of the property and the price of the property when it was acquired.
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Click here for more information on the margin scheme.
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Following its introduction, various changes and proposals have been made in relation to the margin scheme.
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The Institute of Chartered Accountants in Australia [ICAA] has recently called for the abolition of the GST margin scheme due to its complexity and heavy reliance on approved valuations resulting in compliance difficulties for taxpayers.
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The ICAA has proposed that the margin scheme be replaced with the use of a notional input tax credit system which is simpler and minimises compliance costs.
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In its submission, the ICAA has highlighted the following key areas that should be focused on if the margin scheme is to be retained:
- Removing the complexity and room for dispute around valuations;
- Allowing greater flexibility in the margin scheme mechanism to prevent cascading GST for integrated/mix use property developments; and
- Including additional market value cost base rules to tax only the value added by registered entities. |