Margin Scheme Journal Entries

An earlier response to a question on this subject stated the accounting on this issue is complex. Fortunately recent ATO guidance simplifies it a great deal. The link is here: https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Property/GST-and-the-margin-scheme/

Scenario:
On a sale of a strata titled duplex unit, the share of the land purchased under the margin scheme attibutable to the sold unit is $200k. The sale price is $765k. The sale price would be split with $565k allocated as GST-able revenue at Total Sales G1. The $200k would be coded as N-T (Not Reportable) revenue, and does not show on the BAS.

The relevant text from the above link at the time of posting:

Account for GST when using the margin scheme

You need to account for GST when using the margin scheme as follows.

Sales

If you sell property and have chosen to use the margin scheme, you only report the amount of the 'margin' on your sale at G1 (total sales). Do not report the full amount of payment you receive.

If the margin is nil (or a negative amount), do not report any amount at G1 (total sales).

If you are using the accounts method, report the amount of GST on your margin at 1A (GST on sales). If you are using the calculation worksheet method, use the worksheet to calculate the amount of GST to report at 1A (GST on sales).

Purchases

If you buy property and the GST included in the price you paid was worked out using the margin scheme, you are not entitled to a GST credit for the purchase. Do not report the amount of your payment for the purchase at G10 (capital purchases) or G11 (non-capital purchases).

Do not report any GST credit for the purchase at 1B (GST on purchases).

See also:

• https://www.ato.gov.au/Business/GST/In-detail/Managing-GST-in-your-business/Reporting,-paying-and-activity-statements/Completing-your-BAS-for-GST/