CONTENTS 2GST - The Australian Property Institute

api.org.au

CONTENTS 2GST - The Australian Property Institute

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THE LATEST PROPERTY NEWS

March 2012

eNews

CONTENTS

2GST

Update

4Professional

5Member

Alert

62012

Awards

ABOUT THE API

The Australian Property Institute (API) represents

approximately 8,600 property professionals throughout

Australia and overseas. API members include residential,

commercial and plant and machinery valuers, property

advisers, property analysts and fund managers, property

lawyers, and property researchers and academics.

t. 02 6282 2411

e. national@api.org.au

LEADING THE PROPERTY PROFESSIONS

www.api.org.au


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eNews

DRAFT

DETERMINATIONS

GSTD 2012/1 AND

GSTD 2012/2

On 22 February 2012 ATO released

two determinations to deal with

certain GST consequences regarding

the sale of real property that is

subject to a lease.

Ltd & Ors v Commissioner of Taxation and Westley

Nominees Pty Ltd v Coles Supermarkets Australia Pty

Ltd.

For more information, please visit the following::

• Residential: GSTR 2012/1 Goods and services

tax: What are the GST consequences following

the scale of residential premises that are subject

to a lease?

• Commercial:GSTR 2012/2 Goods and services

tax: What are the GST consequences following

the sale of commercial premises that are subject

to a lease?

Goods and services tax (GST) Determination GSTD

2012/1: What are the GST consequences following

the sale of residential premises that are subject to a

lease? explains when a sale of a residential premises

subject to a lease:

• remains an input taxed supply under section 40 –

35 following the sale of a reversion,

• whether the purchaser of the reversion is entitled

to an input tax credit, and

• whether the purchaser has an increasing GST

adjustment under Division 135.

Goods and services tax (GST) Determination GSTD

2012/2: What are the GST consequences following

the sale of commercial premises that are subject to a

lease? explains:

• the GST liability of the vendor and purchaser

in respect of a lease of commercial premises,

following the sale of such premises subject to a

continuing lease,

• how any GST liability for such a supply is

attributed.

The determinations formalise the ATO view contained

in the Decision Impact Statements for the 2009

Full Federal Court cases ofSouth Steyne Hotel Pty

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eNews

DRAFT RULING GSTR

2012/D2 GOODS AND

SERVICES TAX

village accommodation under section 38 260; and

• care services provided in a retirement village

If you have feedback or comments on the draft

Ruling, please provide them to the contact officers

below by 16 April 2012:

GST treatment of fees and charges

payable on exit by residents of a

retirement village operated on a

leasehold or licence basis.

The following draft Ruling was released for comment

on 29 February 2012:

Contact officer: Patrick Giovannelli

Email address: patrick.giovannelli@ato.gov.au

Contact officer: Stephen Iselin

Email address: steven.iselin@ato.gov.au

GSTR 2012/D2 Goods and services tax: GST

treatment of fees and charges payable on exit

by residents of a retirement village operated on a

leasehold or licence basis

The draft Ruling explains the GST treatment of

amounts (for convenience, exit payments) which

a resident becomes liable to pay the operator of

a retirement village when the resident’s interest in

the village terminates. In this context, the resident’s

‘interest’ is a right to possession of residential

premises under a lease or licence.

The draft Ruling does not specifically address:

• exit payments made by residents of a retirement

village where the resident holds a freehold

interest;

• apportionment of input tax credits;

• the development, construction, sale or leasing

of retirement villages, nursing homes, hostels or

boarding homes;

• the activities of charitable institutions under

Subdivision 38 G including supplies of retirement

FINANCIAL REVIEW

COMMERCIAL

PROPERTY

CONFERENCE

Location:

Sydney

Date: 20/03/2012

Time: Registration: 8.15 - 8.45

Start: 8.45 - Finish: 16.25

Networking Drinks: 16:25 - 17:25

Venue:

The Westin Hotel

1 Martin Place, Sydney 2000

Website: http://www.api.org.au/folder/

events/financial-review-commercial-propertyconference-2012

LEADING THE PROPERTY PROFESSIONS

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eNews

PROFESSIONAL

UPDATE - MARCH

2012

The Australian Valuation Standards Board had been

asked to provide guidance to the valuation industry

with respect to the use of the risk rating analysis

developed as part of the PropertyPRO Supporting

Memorandum and Report format.

The Board recognised the continued use of risk

ratings for PropertyPRO reports and full residential

valuation reports undertaken for mortgage

purposes only.

The Board agreed that the risk ratings were not

suitable for use in any other reports including:

MIP valuations

• Commercial valuations (swot analysis

appropriate)

• Kerbside / Restricted Assessments

• Desktop assessments

• Family Court matters

• Pre-Sale / Purchase advice

• Taxation purposes

The Board also commented that the PropertyPRO

format was only suitable for mortgage lending

purposes where the report is undertaken in

accordance with the Supporting Memorandum. It is

not suitable for other purposes.

PROPERTY PRO -

MARCH 2012 UPDATE

The Australian Property Institute in partnership

with Listening Post, a Sydney-based software

development firm, is pleased to announce that

PropertyPRO Online, a system for Valuers to create

and report residential property valuations, is now

available.

PropertyPRO Online, in development for over a

year, is the new web-based version of the popular

PropertyPRO system which has been available

for 10 years based on thick client (non-web)

technology.

The new Online version is also fully conformant

with the recently-revised API Memorandum (2012)

including the new risk ratings, various new rules

about counter-signing, and changes to the RVSA

report format.

The new version removes the need for Valuer firms

to own their own file servers to host the application,

as was required in the old system, so no longer is

there a need for back-ups and system management

to be performed by firms using the system.

All data in the new system is maintained securely in

servers managed and backed-up by Listening Post,

but all data is still owned by the relevant valuers

and available to them at any time.

Data from earlier versions of PropertyPRO can

be imported into the new version, including firm

information and administrative data.

New features in the Online version include a

summary dashboard of recent and current work,

and workflow functions which assign and track

work being handled by the various valuers in the

firm.

Further information can be found at

www.propertyPRO.net.au, including brochure,

screen shots, FAQs, pricing and order form.

LEADING THE PROPERTY PROFESSIONS

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eNews

INTERNATIONAL

VALUATION

STANDARDS 2011 –

ALERT FOR MEMBERS

New International Valuation Standards

have been released and became

operative from 1 January 2012

The International Valuation Standards Council (IVSC)

issued new International Valuation Standards in 2011

(IVS 2011) which became operative on 1 January

2012. The previous 2007 IVSC Valuation Standards,

Applications and Guidance Notes (IVS 2007) as

incorporated in the Australia and New Zealand

Valuation and Property Standards are no longer

applicable, although where no equivalent document

exists in the new Standards, they will likely continue

to be considered an appropriate measure of good

practice.

The 2008 global financial crisis was the key impetus

for the new Standards because it raised awareness of

the importance of valuation. As valuation provides an

essential underpinning to the global financial system,

the IVSC considered it was necessary to develop

better tools that will reduce the chances of another

crisis.

The crisis revealed a number of systemic

weaknesses in the practices of financial institutions

and governments, leading to calls for greater

transparency, accountability and consistency. The

key objective of the new edition of the IVS is to boost

confidence in the valuation process for business

owners, investors, lenders and others who rely

on valuations for investment and other financial

decisions.

The Standards aim to bring consistency and

transparency to the key input assumptions, models

and processes involved in valuation.

IVS 2011 represents a significant change from IVS

2007. The new Standards are principal based in

order to enable them to be applied as widely as

possible. IVS 2007 and previous Standards were

considered too prescriptive and detailed for practical

application across a wide range of global valuation

practice.

Repetition and methodology have been eliminated.

The methodology guidance (which was principally

captured in Guidance Notes) will be replaced with

Technical Information Papers (TIPs). For instance

Guidance Note 8 – The Cost Approach and Guidance

Note 9 – Discounted Cash Flow will become TIPs.

The IVSC has already issued Exposure Drafts for

these TIPs and will release these as final TIPs in the

near future. It is also in the process of developing

many more TIPs on a wide range of technical

matters.

IVS 2011 is divided into three series with an

overarching Framework as follows:

• General Standards,

• Asset Standards,

• Valuation Applications

This briefing paper is provided as a high level guide

only and members are strongly urged to obtain a

copy of IVS 2011 from the IVSC. Copies can be

ordered at: http://www.ivsc.org/index.html.

READ MORE...

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eNews

VALUATION ISSUES

PAPER

Extract from the ATO website

The ATO has issued a number of legislative

determinations that are applicable to margin

scheme valuations, the latest being MSV 2009/1.

All determinations require valuations prepared by

professional valuers to determine the market value of

the property at the valuation date. The ATO considers

it is a requirement in a market valuation for the valuer

to reflect the value of the subject property on an ‘as

is’ basis as at the valuation date.

We have undertaken a significant number of

compliance activities since GST was introduced

in relation to the sale of real property and whether

the margin scheme provisions have been applied

correctly. In examining the application of the margin

scheme we often encounter valuations which have

been used in calculating the GST payable. Given

that ATO compliance staff are not professional

valuers, many valuations are referred to the Australian

Valuation Office (AVO) for a critique. The AVO

assesses whether the valuation complies with the

ATO determinations, professional standards, if the

AVO has concerns on compliance, and provides an

opinion on whether or not the valuation specifies a

value that is within a range that is reasonable. Often,

when certain elements of a valuation are outside an

acceptable range, the ultimate valuation is higher

than it should be resulting in a lower margin and less

GST payable.

In reviewing the responses we have received to date

from the AVO regarding non-complying valuations

we have identified a number of recurring issues. The

following outlines some of the issues identified and

the ATO’s position when these issues occur.

This paper has been prepared in collaboration with

the Australian Property Institute and the AVO.

View the complete article on the ATO website

2012 API NATIONAL

AWARDS & PRIZES

List of API National Awards & Prizes

• Peter Barrington Gold Medal Award

• New Property Researcher Award

• Ronald Collier Memorial Prize

• Harry Thomas Memorial Award

• Gregory J Preston Education Award

Please contact your State Division for an Application

Form.

READ MORE...

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