| . |
| Margin scheme |
|
|
|
Sellers If you make a sale of real property and GST is payable, you may be able to use the margin scheme to calculate the amount of GST. Purchasers Regardless of whether you are registered for GST, the seller may ask you to agree in writing to make the purchase under the margin scheme. If you agree and the margin scheme is used, you will not be entitled to claim a GST credit for the GST included in the purchase price. |
| The margin scheme is an alternative
method of calculating the GST
payable when real property is sold
as part of a business. GST payable
is equal to one-eleventh of the
‘margin’, rather than one-eleventh of
the total selling price.
Depending on when the property was purchased and who it was purchased from, the margin is generally the difference between the sale price and:
The seller and the purchaser must agree, in writing, to use the margin scheme if real property is being sold under contracts entered into on or after 29 June 2005. The written agreement must be made by the time the property is supplied (usually at settlement). There is no prescribed form for the written agreement, but there must be a written statement which makes it clear that the seller and the purchaser have agreed the margin scheme is to apply to the sale. This statement may form part of the sale contract or it may be in a separate document. However, the seller does not need to make a written agreement with the purchaser if they are selling real property under rights or options granted before 29 June 2005. Instead, the seller must make a choice to use the margin scheme by the time the property is supplied (usually at settlement) and have records to show that they have made that choice. |