Single Touch Payroll (STP), is an Australian Government initiative to reduce employers' reporting burdens to…
What is the Margin Scheme?
The margin scheme is a method of calculating the Goods and Services Tax (often abbreviated to GST) that needs to be paid when they sell a property through their business. The margin scheme is only applied if the property’s sale is taxable.
How to Apply a Margin Scheme to a Property Sale
In order to use the margin scheme to work out the cost of a property sale’s GST, a seller will need to create a written agreement between themselves and the buyer to sell the property with the margin scheme applied (note that this needs to be drawn up and signed before the settlement date, not after).
In general, those who buy a property under the margin scheme won’t be able to claim GST credit for the GST Tax included in the price they paid to buy the building. In the instance where a purchaser was charged the full cost of the GST, the margin scheme can’t usually be applied when selling the property.
Those who are charged the full amount of the GST when they bought a building as part of their business will usually be able to claim the GST credit cost back.
Using an online calculation tool (or even a few) may be worthwhile; as this can often provide individuals with a better idea of what to expect in terms of how much their GST will come to.
For more information around the margin scheme, seek help from Roy A. McDonald Accountants.