The margin scheme is a method of working out the GST you should pay when you want to sell the property as being a part of your business. But the scheme margin is subject to eligibility. If you need the best assistance on knowing what is the GST margin scheme contact Mosaic Tax Legal, based in Sydney. They even provide services to clients throughout Australia and all around the world as well.
Eligibility for using the margin scheme
If you are selling your property as a part of your business and you are even registered for GST, you can use the margin scheme for working out how much GST you need to pay.
If you are using the margin scheme, the parties need to have a written agreement for using the margin scheme before the settlement. For the purpose of GST, the date of settlement is the purchase date of the property. Many contracts even provide a box, stating whether the sale is subject to a margin scheme or not.
How to calculate the GST payable?
Normally, the amount of GST that is paid on selling a property is equal to one-eleventh of the total selling price.
If you use the margin scheme, the GST amount on property sale is equal to one-eleventh of the margin. You can even use the tool for GST property decisions if you need any further help in the calculation. Contact Mosaic Tax Legal, for understanding and calculation of your GST margin, if you want an easy way out.
Calculating the margin
Generally, the margin is the difference between the sale price and either the:
- Property’s value offered in an approved property valuation if you use the valuation method
- Amount you had paid for the property when using the consideration method.
Under the margin scheme, when you use the valuation method for selling property, you should use an approved method to value your property.
There are mainly 3 valuation methods:
- A valuation made by a territory or a state department to rate or tax purposes
- A valuation is done by an approved valuer
- A valuation is done on the basis of the payment that the seller gets under the contract of sale (provided that the contract was done before the date of valuation).
For properties that are completed partly at the date of valuation, make use of the value in proper writing from the professional valuer.
Any valuation should include the following:
- Be explained as well as documented good enough for any other valuer to understand how should the outcome work out and thus replicate the process.
- Precisely show the valuer who undertook the process of valuation, according to the practices of the industry.
You should have a valuation completed by the due date to lodge your activity statement within the tax period, where the sale applies.
Mosaic Tax Legal is one of the best places if you are looking for any help in learning what is the GST margin scheme, in Sydney. They also help lawyers, accountants, and end clients across various industries, dealing in multiple tax issues that are related to their transactions, investments, and business throughout Australia.