The Trustee for the Seabreeze Estate Unit Trust and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered whether the Trustee for the Seabreeze Estate Unit Trust (the Trustee) was eligible to apply the margin scheme to its sale of two townhouses. The dispute arose because the Commissioner of Taxation disallowed the Trustee's objection, asserting that the Trustee had not provided sufficient evidence to demonstrate that its acquisition of the underlying land was eligible for the margin scheme, thereby rendering its subsequent sale ineligible.

The primary legal issue before the Tribunal was to determine if the Trustee was eligible to use the margin scheme for its supplies of the townhouses. This eligibility hinged on whether the Trustee acquired the freehold interest in the land through a supply that was itself eligible for the margin scheme, as stipulated by section 75-5(2) of the *A New Tax System (Goods and Services Tax) Act 1999* (GST Act). A further consideration was whether the vendor of the land to the Trustee had made a choice to apply the margin scheme.

The Tribunal reasoned that the Trustee was eligible to use the margin scheme because it acquired the freehold interest in the land through a taxable supply that was not ineligible for the margin scheme. While the full contract for the land sale was unavailable, the front page indicated that GST was included in the price, subject to clause 13. Crucially, the Tribunal found that the Commissioner had not adequately addressed whether the vendor of the land to the Trustee was itself ineligible to use the margin scheme. Given this, and that the issue was not fully ventilated, the Tribunal concluded that the Trustee's objection should be allowed. The Tribunal set aside the Commissioner's objection decision and substituted it with a decision allowing the Trustee's objection, confirming the eligibility of the supplies for the margin scheme and reducing the assessed penalty accordingly.