Property assessment using historical information is an “approved assessment” for GST purposes

In a case referred to the AAT by the Federal Court, the AAT ruled that a property valuation that used a discounted cash flow method and historical information was an “approved valuation” for purposes of the margin regime. of GST.


The taxpayers were co-trustees of the PRS Unit Trust. The first taxpayer, Decleah Investments Pty Ltd (the taxpayer) was a property developer who purchased land before the introduction of the GST. It then subdivided and otherwise developed the land, gradually selling lots and applying the margin regime provisions of Div 75 of the GST Act to the sales.

The taxpayer’s appraiser used a discounted cash flow method to value the land as of July 1, 2000. However, rather than looking at the land as it was on July 1, 2000, with its zoning and conditions then, and then projecting possible future cash inflows and outflows to determine likely net cash over a period of several years, he instead used the actual outflows and inflows that had occurred from 2000 through the date of its assessment. The Commissioner disagreed with this approach and obtained his own assessment.

Trial (2017 ATC ¶10-466; [2017] AATA 2418), the AAT rejected the taxpayer’s assessment and increased the GST payable and penalties payable to 50% for recklessness. She concluded that there were “serious problems” with the methodology adopted by the taxpayer’s assessor.

The taxpayer then appealed to the Federal Court, arguing that it was sufficient that the valuation obtained complied with the Commissioner’s requirements (see Margin Scheme Valuation Requirements Determination MSV 2009/1). The court held that the issue to be decided was whether the taxpayer’s valuation was done in a manner that was not contrary to professional standards. If so, it was an “approved assessment” conducted in accordance with the Commissioner’s requirements. It allowed the taxpayer’s appeal and referred the matter back to the AAT for reconsideration as required by law (2018 ATC ¶20-656; [2018] FCA 717).

On remand, the commissioner argued that the taxpayer’s most recent appraisal (done in August 2014), which valued the land at $22 million as of July 1, 2000, was not an approved appraisal for the purposes of the division. 75 because it used historical information. According to the commissioner, the value of the land was only $8,155,000.

The taxpayer argued that at the time of the valuation there were no recognized professional standards in Australia for carrying out property valuations which regulated the use of historical information in valuations at a general level or how his appraiser’s assessments should have been made. . Therefore, if there were no standards applicable to the way his appraiser carried out his valuation, the valuation could not have been made contrary to the applicable standards. Expert evidence was provided to the AAT that the assessment was conducted in a manner not contrary to applicable professional standards and that it complied with MSV 2009/1. As such, it was an “approved assessment”.


The AAT found that the assessor’s appraisal of the taxpayer was not contrary to professional standards and, despite the disparity in the numerical value of the appraisal, should be accepted. She ruled that the GST liability should be calculated based on the approved appraisal amount of $22 million.

Source: Decleah Investments Pty Ltd & Anor as Trustee of PRS Unit Trust v FC of T 2021 ATC ¶10-607; [2021] AATA 4821, December 24, 2021.