To calculate GST using the margin scheme, subtract the purchase price of the property (excluding development costs) from the selling price. This gives you the margin, on which GST is calculated. Then, add this GST to the selling price to get the total amount the buyer pays.
For example, if you sell a property for $1 million and the margin (calculated as explained) is $300,000, then the total amount the buyer pays would be $1.3 million.
In the profit and loss account for tax purposes, you would record the sale as revenue of $1 million. However, for expenses, you would list the cost of the property plus any development costs (excluding GST).
If you have any questions, feel free to contact Tax Ideas Accountants & Advisers. You can also book an appointment through our live calendar.
