What is the Margin Scheme?

Oct 10, 2022, 16:47 PM
Title : What is the Margin Scheme?

The Margin Scheme provides relief to property transactions by allowing a reduced amount of the Goods and Services Tax (GST) to be paid. It applies to the supply of freehold interests in land, strata units and long-term leases.

The GST is normally applied to the full sale price of taxable goods and services, however a property developer who is registered for GST may choose to only apply the GST to the margin.

The margin is the difference between the sale price (including GST) less the original purchase price of the development site or, in the transition, the difference between the sale price and the valuation of the property (including works in progress) as at 1 July 2000.

The Margin Scheme ensures the GST is payable only on the value added by the developer. It also reduces the GST component applicable to the sale of new residential property sold by developers after 1 July 2000 who are registered for GST.

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