A GST-registered developer sells a newly built house and land package and does not use the margin scheme. On what is the GST worked out?
Correct Answer
A) The full purchase price, covering both the land and the new dwelling.
A sale of new residential premises by a GST-registered developer is a taxable supply. Without the margin scheme, GST is one-eleventh of the GST-inclusive price, covering the land and the dwelling together. If the parties agree in writing to use the margin scheme, GST is instead one-eleventh of the margin, broadly the difference between the sale price and the developer's cost or valuation of the land.
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