Changes to the Australian GST Immovable Property 'Margin Scheme'
October 1, 2006
International VAT Monitor, Vol. 17, No. 5, 2006
One of the unique features of Australia's GST is the margin scheme applicable to supplies of immovable property, which has important implications for property transactions and GST revenue, particularly since these transactions generally involve large investments. The margin scheme did not only serve as a special transitional rule for supplies of premises that were under construction at the time of the introduction of GST, but also provides for a structural reduction of the GST burden on wholly post-introduction transactions. The latter rules were subject to significant unanticipated abuse. In this article, the author explains the basic rules for the margin scheme and the problems that have arisen in practice. She also discusses how the rules were amended to address these problems and whether or not the changes will work.
Keywords: GST, margin scheme, Australia
JEL Classification: E62, H24, H26, K34
Date posted: June 18, 2012