Margin Scheme Changes

By Luke Mountford / 02 February 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.

Luke Mountford
Luke is a Partner in our Private Enterprise practice and he works predominantly with HG Private clients advising on their corporate and commercial legal matters.

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