07 Jul 1010 AAT considers application of margin scheme and anti-avoidance provisions of GST Act
The AAT has considered the application of the margin scheme and the potential application of Div 165 of the GST Act (the anti-avoidance equivalent of Part IVA) in the context of the sale, to members of the public, of completed apartments in a resort development. Prior to the sale to members of the public, a sale of the apartments whilst partially completed had taken place between one company in the corporate group (Oldco) and one or other of two companies in the same corporate group (Newco 1 and Newco 2).
Amongst other things, the Commissioner made a declaration under Div 165 negating GST benefits in excess of $21m. The Commissioner alleged that the sale of the partially completed apartments from Oldco to either Newco 1 and Newco 2 was part of a scheme which gave a higher value for the purposes of the margin scheme and thus reduced the amount of GST payalble.
The AAT held that for supplies up to and including 16 March 2005 (when Div 75 of the GST Act was amended), the taxpayer was entitled, subject to the potential application of Div 165, to apply the margin scheme on the basis that the consideration for the acquisition was the sale price between Oldco and Newco 1 and Newco 2.
However, Div 165 applied to supplies up to and including 16 March 2005 insofar as they were made pursuant to contracts entered into between Oldco and members of the public before the sale, by Oldco, of the partially complete apartments to either Newco 1or Newco 2. In contrast, Div 165 had no application to supplies made pursuant to contracts entered into between either Newco 1or Newco 2 and members of the public, after the sale by Oldco.
The AAT further held that for supplies on and from 17 March 2005, the taxpayer ought to be given the opportunity to produce to the Commissioner an approved valuation of the apartments as at 1 July 2000. Div 165 had no application to these supplies, as the sale from Oldco to either Newco 1or Newco 2 could not affect this valuation.
The Taxpayer and FCT  AATA 497 (AAT; Hack DP and O’Loughlin SM; 2 July 2010).