For real estate developers, GST, which must pay on the sale of real estate, can eat heavily in profits. However, the GST can be reduced if the margin scheme is used. If the sales contract was concluded on or after June 29, 2005, both the buyer and the seller must agree in writing to apply the margin regime. The agreement on the use of the margin plan must be concluded before the sale is completed. John submits a subdivision plan for Seaview Estate, consisting of 200 parcels and approved by local authorities. John writes to his lawyer to tell him that tickets 1 to 50 are sold on the margin scheme. The lawyer advises buyers of lots 1 to 50 that the margin regime applies and establishes the sales contracts. Buyers of Lots 1 to 50 all agree in writing that the sale must be made under the margin plan. The advantage of the margin scheme is obviously to reduce the GST.
You inherited ownership from someone who could not use the margin scheme. The property purchased as a participant in a GST joint venture with the joint venture operator who was unable to benefit from the margina plan, or if, upon purchase of the property, the sale to you was fully taxable and the Margin system was not used If you have not entered into a written agreement at the time of sale, you may request permission to extend the period of the written agreement. There is no defined format for a written agreement, but there must be a written statement that states that you and the buyer have agreed to use the margin scheme for sale and that the property sold is clearly identified. This statement may be part of the sales contract, or it may be a separate document. You cannot apply the margin scheme to a delivery you make if you purchased the property under the following circumstances: This also means that a developer might consider using the margin scheme for authorized sales in order to use the margin scheme depending on when the property was purchased and when the property is sold. Changes to eligibility requirements in 2005 and 2008 should be taken into account. You have the right to use the margin scheme in the following circumstances: there must be a written agreement between the seller (seller) and the buyer for the margin scheme to be the application. Both the buyer and the seller must agree in writing on the application of the margin scheme when the sales contract was concluded on or after June 29, 2005. The agreement on the use of the margin scheme must be reached until the delivery of the property, usually during billing. The margin scheme is a way to develop the GST that you must pay if you sell real estate as part of your business.