Developer’s valuation of property sold under margin scheme rejected.

A property developer was unsuccessful in challenging the Commissioner’s calculation of GST liabilities for large-scale developments under the margin scheme.

Facts

The developer acquired land from the ACT Suburban Land Agency (SLA) in 2015 and 2017, providing both cash and development services as consideration. In return, it received short-term leases, later converted to 99-year leases for sale to residential buyers.

Applying the margin scheme, the developer valued its non-monetary consideration (the development services) using land valuations based on expected sale prices of the 99-year leases, less the cash paid to SLA. It then issued tax invoices to SLA, including $16.3 million in GST, which SLA paid between September 2017 and November 2018.

Decision

The ART upheld the Commissioner’s position, ruling that the developer had not proven the amended assessments were excessive.

It found the $16.3 million paid by SLA counted as consideration under the margin scheme. The Tribunal also ruled that a private ruling obtained by the developer did not compel the Commissioner to accept its valuation and that the methodology used, valuing land by reference to future 99-year lease sales, had an “air of unreality”.