- Be very careful using the margin scheme.
- Be very careful using the going concern exemption.
- There are multiple different GST scenarios requiring separate analysis.
Three lawyers walk into a bar. Allan, Barry and Charlie. It’s Friday, they’re good mates, they’ve all had a bad week, and they want to share the pain. Allan goes first.
I acted for this couple – Alex and Allie – on the sale of the building they’d used for their shoe shop business. In 2012, they’d bought the building and business GST-free as a going concern from a family that had run it since well before 2000.
They couldn’t use the going concern exemption on the sale because the buyer didn’t want the business. And we couldn’t treat it as a normal taxable supply because the buyer wasn’t registered for GST – and refused to register – and we couldn’t agree on a GST-inclusive price. So, eventually they agreed to use the margin scheme.
‘But hang on a minute,’ says Barry. ‘You can’t use the margin scheme if you acquired the property as a going concern, can you?’ To which Allan replied, ‘Well, yes, you can apparently, if the seller to you bought the property before 2000.’
So Alex and Allie were okay with this – they worked out the margin between 2012 and now w as $100,000 so 1/11th of this at a little over $9,000 was okay.