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  • Second-hand goods

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    Most dealers in second-hand goods will not be impacted by the recent law changes. However, if you deal in related precious metal business-to-business transactions you may be required to reverse charge certain transactions.

    Definition of second-hand goods

    The definition of second-hand goods has been amended to clarify that goods containing gold, silver or platinum are not second-hand goods. This ensures that gold, silver or platinum bars that are scratched or slightly defaced don't fall within the definition of second-hand goods.

    There are some occasions where precious metal goods are still considered second-hand goods, including:

    • when their value satisfies the valuable metal threshold test
    • when they are considered collectables or antiques.

    In addition to this, the Treasurer can determine that a class of goods that are not likely to be subject to exploitation will continue to be treated as second-hand goods.

    Threshold test

    Goods whose value satisfies the valuable metal threshold test may qualify as second-hand goods, despite the second-hand goods containing some valuable metals.

    This applies when:

    • a dealer buys and sells finished goods from a person who is not registered for GST
    • the value of the goods is substantially greater than the intrinsic value of any constituent valuable metals.

    This also applies if they contain gold, silver or platinum, for example:

    • a $5,000 watch that contains $700 worth of gold content
    • a computer worth $400 that has a small quantity of silver worth $50
    • a collector's sports trophy worth $1,000 containing silver worth $150
    • a silver brooch (jewellery) containing a number of precious stones set in silver; the brooch is valued at $3,000 but the price of the silver is only around $100
    • a chest of drawers with gold inlay (furniture), the chest of drawers sells for $4,400 and the spot price of gold would be around $2,000.

    Some of these items meet both the collectable and antique test and the 10% threshold test.

    If the value of the goods exceeds the intrinsic value of any constituent valuable metals by a threshold amount of at least 10%, this highlights the good should properly be characterised as consisting of the value-added product, rather than the constituent metal.

    Importantly, this 10% test applies to each valuable metal within the item.

    The collectable or antique test

    Collectables and antiques should also be considered second-hand goods when they both:

    • consist wholly or partly of valuable metal (but are not ‘precious metal’)
    • are acquired for the purposes of sale or exchange (but not for manufacture) in the ordinary course of business.

    There are no definitions of the terms ‘collectables’ or ‘antiques’ in the GST Act. Therefore, the ordinary meaning of the terms ‘collectables’ and ‘antiques’ applies, taking into account the context and purpose of the legislation.

    The context in which the words are used in the GST Act is that of trading in second-hand goods that contain valuable metal, and needing to determine when those goods qualify for claiming input tax credits under Division 66 of the GST Act.

    Items that could qualify as collectables and antiques would include:

    • numismatic (collectable) coins, rounds, tokens or medallions, including items that are coloured, themed or commemorative
    • collectable bullion bars, ingots or wafers that are minted with keepsake designs, packaged and sold as collectables
    • older pieces of jewellery with a well-known or renowned maker’s mark and metal mark (for example Tiffany & Co, Rolex, Gucci, Bulgari) that are regarded as prestigious brands with identifying hallmarks
    • antique jewellery (meaning pieces at least 100 years old)
    • rare or antique pieces of silverware or goldware
    • items comprising 15 carat gold, which would generally qualify as 'antiques', given that these items ceased being made in the mid-1930s these would also be considered as a collectable item.

    Items that would not qualify as ‘collectables’ or ‘antiques’ may include:

    • ordinary jewellery containing gold, silver or platinum (whether or not it also includes valuable stones or other materials)
    • medallions, rounds, tokens or coins that are not genuinely collectable
    • common pieces of goldware or silverware
    • scrap gold, silver or platinum of any kind
    • items sold to a refiner to be melted or altered, which would not generally be regarded as collectable.

    In addition to goods which satisfy the threshold test or the collectables and antiques test, the Minister can deem prospectively that a class of goods that are not likely to be subject to exploitation will continue to be second-hand goods, despite the amendments to the definition. For an example, see A New Tax System (Goods and Services Tax) (Incidental Valuable Metal Goods) Determination 2017 (No. 1)External Link.

    See also:

      Last modified: 17 Jan 2020QC 50847