GST is unforgiving about timing. The margin scheme has to be agreed in writing on or before settlement. The going concern treatment depends on what was actually supplied and what the parties agreed in writing before the supply. Get the contract wrong and the tax is real, immediate and usually not recoverable from the other side.
The bulk of the GST work we do sits at the intersection of property and GST: developments, subdivisions, mixed supplies, and the recovery questions that arise when the GST treatment turns out to be wrong.
Where we act
What we do
- Margin scheme eligibility, valuation and calculation, including on subdivided lots
- Going concern and farmland GST-free supplies, and the written agreement requirements
- GST on new residential premises, substantial renovations and the five-year rule
- GST withholding at settlement on residential premises and potential residential land
- Enterprise, registration and the one-off property transaction
- Business sales: apportionment, mixed supplies, and the GST clause in the contract
- Input tax credits, creditable purpose and apportionment methodologies
- Adjustment events, increasing and decreasing adjustments, and Division 129
- GST disputes, refund claims and section 105-65 restrictions on refunds
- Recovery of GST between parties where a contract has gone wrong
Common situations
What we are usually brought in on
The contract is silent on the margin scheme
The written agreement to apply the margin scheme has to be made on or before settlement. There is no retrospective fix once the supply has been made.
The going concern conditions are assumed
A supply is only GST-free as a going concern where all the things necessary for the continued operation of the enterprise are supplied, the enterprise is carried on until the day of the supply, and the parties agreed in writing before the supply.
A one-off subdivision becomes an enterprise
Whether a landholder is carrying on an enterprise, and so is required to be registered, is a question of fact and degree. The consequences of getting it wrong run in both directions — unremitted GST, or lost input tax credits.
The GST turns out to be payable and the contract does not say who bears it
Recovery between the parties then depends on the drafting, not on the tax law. This is where GST advice and contract review have to happen together.
How we work
Our approach
Before settlement, not after. Most GST outcomes are locked in by the contract. We would rather review a clause than argue about it.
Work with the conveyancer. Conveyancing retainers frequently exclude tax and duty advice. We are comfortable being the party who covers that gap explicitly.
Written calculations. Where the margin scheme or an apportionment is involved, the advice includes the working, so it can be checked and reused.
Common questions
When does the margin scheme have to be agreed?
The supplier and recipient must agree in writing that the margin scheme is to apply on or before the making of the supply — in practice, on or before settlement. The Commissioner has a discretion to allow a later agreement in limited circumstances, but it should never be relied on as the plan.
Is a sale of a business always a going concern?
No. The going concern concession has specific statutory conditions, including that everything necessary for the continued operation of the enterprise is supplied and that the supplier carries on the enterprise until the day of the supply. A sale of assets alone will usually not qualify.
Have a matter you want a straight answer on?
Most engagements start with a short conversation about the issue, what the exposure looks like and what it would cost to deal with it properly. There is no charge for that conversation.