Services

HG Paper: Margin Scheme Changes - Feb 2009

The latest round of legislative change to the operation of the margin scheme received royal assent on 9 December 2008. The changed rules apply where:

  • you acquired the property your are selling through a supply made after 8 December 2008;
  • the supply to you was not made under a written agreement, right or option:
    -  entered into or granted before 8 December 2008; and
    -  which specified the consideration payable or a way of working the consideration out.

The reasoning behind these exceptions seems to be that if a supplier is already locked into acquiring a property at a price that does not reflect the additional GST costs under the new legislation the old rules should apply.

For acquisition agreements made after 8 December 2008, the new rules will need to be taken into account in determining whether the margin scheme can be used on any on-sales, working out the ultimate GST cost, (both of which will require information from the entity who supplied the property to you) and negotiating the price to be paid.

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