External reviews
Notional GST external review opinion - improvements on land (Crennan evaluation)
Date: 24 May 2017
| The following has been prepared by the ATO as a summary of the legal issue and principles arising from an external review regarding improvements on land for the purposes of table item 4 of subsection 75-10(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
The external review opinion of Susan Crennan AC QC was provided on 24 May 2017. This summary is published for transparency reasons. While the ATO is not bound by this external review opinion, the ATO has adopted the principles decided in this opinion. |
Context
1. Table item 4 of subsection 75-10(3) of the GST Act (item 4) provides that the valuation date for a supply of land under the margin scheme is the day of the supply if the supplier of land is the Commonwealth, a State or a Territory which has held the interest, unit or lease since before 1 July 2000, and there were no improvements on the land or premises in question as at 1 July 2000.
Legal issues considered
2. For the purposes of table item 4, where there was an improvement on the land at 1 July 2000, and the land is later subdivided such that the previous improvement would have been on what are now multiple titles for individual sale:
- •
- Has the improvement as at 1 July 2000 lost its character as an improvement if a later individual subdivided title only has a part of that improvement?
- •
- Must the part of the improvement that existed as at 1 July 2000 have value or usefulness for the purpose for which the later subdivided title is to be used?
Principles decided
3. Where there was an improvement on land as at 1 July 2000 and the land is later subdivided such that the previous improvement would have been on what are now multiple titles for individual sale:
- •
- The land is assessed as at 1 July 2000. If there was an improvement on the land as at 1 July 2000 and the improvement, or part of that improvement, was on that part of the land representing the later individual subdivided title, that later individual subdivided title had improvements as at 1 July 2000.
- •
- The improvement as at 1 July 2000 does not lose its character as an improvement as at 1 July 2000 because of later subdivision.
- •
- It is not relevant whether the improvement, or part of that improvement, as at 1 July 2000, has value or usefulness for the later subdivided title either generally or for the purpose for which the later title is to be used.
Legislative References:
GSTA 1999
GSTA 1999 75-10(3)