The GST margin scheme that applies to property will be simplified as part of the Gillard Government's ongoing commitment to making Australia's tax system easier to use and understand, the Assistant Treasurer, the Hon Bill Shorten, announced today.
While releasing a consultation paper on reforms to the GST margin scheme, the Minister said 'These changes will clarify and simplify the GST margin scheme provisions, reducing compliance costs for a wide range of businesses involved in the building and property industry.'
The GST margin scheme allows taxpayers an alternative means of calculating GST on property. When calculating GST in the normal way, GST is one eleventh of the GST inclusive selling price. Under the margin scheme, the GST is calculated as one eleventh of the difference between the selling price and the acquisition cost of the property (the margin), however, the supplier has no entitlement to input tax credits for its acquisition of the property.
The Government announced the changes in the 2010-11 Budget following a review by the Treasury of the GST margin scheme.
'As well as simplifying the legislation, the Government wants to ensure an approved valuation of land can be used to calculate the margin on subdivided land,' the Assistant Treasurer said.
The changes will apply from 1 July 2012.
The consultation paper is available on the Treasury website www.treasury.gov.au. Consultation closes on Friday, 21 January 2011. Submissions received in response to the Treasury's review of the GST margin scheme are also available from the Treasury website.
'I urge stakeholders to provide feedback on the design of these GST margin scheme measures. Identifying any implementation issues or concerns with how the measures interact with other areas of the law is a vital contribution stakeholders can make.'
'Stakeholder feedback plays an important role in designing legislative changes and it will be considered in developing legislation and explanatory material,' The Assistant Treasurer said.
Exposure draft legislation and draft explanatory material for this measure will be released at a later time for consultation.