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Who We Help
For property developers and investors
Margin scheme, revenue versus capital, duty across jurisdictions, and the structure the project has to be held in from day one.
Property development attracts every tax at once: income tax on the profit, GST on the sales, duty on the acquisition, land tax while it is held, and the general anti-avoidance provision over the top of the structure. They interact, and several of them are locked in by decisions made before a single lot is sold.
The recurring theme is that the tax outcome is fixed early — in the acquisition structure, in the contract, and in the way the project is characterised from the outset.
What we help with
The work
- Development entity structuring and the interaction with land tax, duty and CGT
- Revenue versus capital: isolated profit-making undertakings and trading stock
- GST and the margin scheme, including on subdivided lots and staged releases
- Going concern and farmland GST-free supplies on acquisition
- New residential premises, the five-year rule and GST withholding at settlement
- Duty: landholder duty, aggregation, and duty on the development structure itself
- Land tax and surcharge land tax, including foreign person exposure through trusts
- Joint ventures, development agreements and profit share arrangements
- ATO guidance on property development structures and Part IVA risk
- Project wind-down, liquidation and getting the profit out
Common situations
Common situations
The margin scheme was not agreed before settlement
The written agreement has to exist on or before the supply. Once settlement has happened the option is generally gone, and the GST cost falls straight to the bottom line.
The project was treated as capital and the ATO says it is revenue
Characterisation drives the CGT discount, trading stock treatment and the GST analysis. It is decided on the facts and intentions at acquisition, so the contemporaneous record is critical.
The holding structure creates a foreign person
A discretionary trust with a wide beneficiary class can attract surcharge purchaser duty and surcharge land tax even where every actual participant is Australian.
Profit has to come out of the entity
Getting development profit out of a company or trust efficiently is a separate exercise from making the profit, and it should be planned at the start rather than at the end.
How we work
How it works
Before acquisition. The cheapest advice on a development is the advice given before the contract is signed.
Across taxes. Income tax, GST, duty and land tax are advised together, because on a development they cannot sensibly be separated.
Documented rationale. Where the structure is chosen for commercial reasons, we make sure those reasons are recorded at the time, not reconstructed later.
Common questions
Is the profit on a subdivision capital or revenue?
It depends on the facts, particularly the purpose at acquisition and the scale and nature of the activities undertaken. A mere realisation of a capital asset is treated differently from a profit-making undertaking or a business of development, and the difference affects the CGT discount, trading stock treatment and GST. Because it turns on intention and conduct, the contemporaneous evidence is decisive.
Can we still use the margin scheme if we bought under it?
Eligibility depends on how the property was acquired and from whom, and the calculation differs depending on the acquisition history. It also requires a written agreement with each purchaser on or before settlement. Both limbs need to be checked before the contracts go out, not after.
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.