Supplies of precious metals that are not of the required fineness are taxable supplies and will be reverse charged when sold to a registered business.
The first supply of a precious metal after refining is GST-free (zero-rate). Subsequent supplies of precious metal are treated as input taxed (exempt). If the precious metal is subsequently altered, and is no longer of the required fineness or in an investment form, it no longer meets the definition of precious metal and is treated as valuable metal. Then the supply reverts to a taxable supply and will be subject to the new reverse charge rules.
Definition of precious metal
Under Australian GST law a ‘precious metal’ is defined as either:
- gold (in an investment form) of at least 99.5% fineness
- silver (in an investment form) of at least 99.9% fineness
- platinum (in an investment form) of at least 99% fineness
- any other substance (in an investment form) specified in the regulations of a particular fineness specified in the regulations.
Examples of precious metals include goods (bars, bullion) that consist of gold, silver or platinum that are equal or greater than the fineness percentages mentioned above.
Definition of valuable metal
‘Valuable metal’ means gold, silver, or platinum that would not qualify as a precious metal due to not being of the requisite fineness and in an investment form.
Examples of valuable metals:
- goods that consist of gold, silver or platinum that are less than the fineness percentages mentioned above
- gold dore
- gold granules
- gold bars which are not in investment form.
Goods do not need to be entirely comprised of valuable metal to be subject to the mandatory reverse charge.
See also: