11. What is the margin scheme?A vendor of real property may choose to apply the margin scheme to confine the amount of GST payable to GST on the margin. The margin represents the amount which the consideration for the supply exceeds the consideration for the previous acquisition of the land by the vendor (or if the vendor acquired the land before 1st July 2000, the value as at the 1st July 2000). For example assume the vendor held land as at 1st July 2000 and at that date the land was valued at $1 million. The vendor sells the land at a later date for $1.2 million. The vendor need return GST only on the difference between the consideration of the sale and the valuation of the land as at 1st July 2000, i.e. on $200,000. |
