The ATO has issued a draft legislative instrument (LI 2022/D14) with effect on the date it is registered, which will specify the requirements for making valuations for the purposes of the margin scheme under the GST Act.
Importantly, the draft takes into account the decision in Decleah Investments Pty Ltd and Anor as Trustee for the PRS Unit Trust and Commissioner of Taxation (Taxation) [2021] AATA 4821.
The decision emphasised the importance of following relevant accounting methods in the valuation process applying at the time of valuation – rather than the correctness (or not) of the final valuation amount.
We cannot stress enough that you must be able to demonstrate that the market valuations you have relied on were based on reports commissioned in a transparent manner from independent and qualified valuers, because generally, if you engage and properly instruct a professional valuer, you will not be liable for penalties if the ATO finds that the valuation is deficient.
If you need any advice on your properties and valuations, please do not hesitate to contact us on info@xwd.com.au or 03 6292 6012.
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