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Edited version of private ruling

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Ruling

Subject: GST and importation of silver medallions

Questions:

Advice

Relevant facts

You are an individual and lately have imported some silver medallions which you purchased from an overseas company. You are not a dealer in precious metal.

The price for each coin was derived from the spot price of silver plus a manufacturing premium. These medallions are purely investment form of silver bullion and have no numismatic collectors' value attached to them.

The metal for the medallions is silver and the price of these medallions is determined solely on their metal content. The coins are freely available and are sold to the general public via the overseas company's website.

The medallions carry all the required markings describing purity, weight and silver content. The purity of the silver is 99.999% and is guaranteed by an independent assessor's certificate and available for viewing at the overseas Company's website.

You have provided us with a copy of the Import Declaration which showed you are the importer of the medallions.

Reasons for decisions

Question 1

The term precious metal is defined in section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). It states:

Goods and Services Tax Ruling GSTR 2003/10 (available at www.ato.gov.au) provides guidance on what is 'precious metal' for the purposes of the GST Act.

Paragraph 10 of GSTR 2003/10 explains that to be precious metal, a thing must be the metal gold, silver or platinum of specified fineness or a substance listed in the regulations. The gold, silver, platinum or other substance must also be in an investment form.

Currently, the regulations do not specify any form of metal that will be a precious metal under the GST legislation. Accordingly to be precious metal for GST purposes, the metal must be gold, silver or platinum and must also be in an investment form.

Metal silver

To be the metal silver, the item must have the character of the metal rather than the character of a thing made from the metal.

A factor that can point to whether something has lost its character as the metal silver is, whether it is traded at a price that is determined by a reference to the prevailing spot price for the metal. If something is not usually traded at a price determined by reference to the prevailing spot price of its metal content it is not being traded for its metal value only. For example, proof coins are traded at a price that reflects the quality of the finish over and above what is necessary to trade the metal value.

From the facts given, the medallions are made of the metal silver and the price of these medallions is determined solely on their metal content and is derived from the spot price of the silver. The medallions therefore have the character of metal silver.

Investment form

What is 'in an investment form' is not defined in the GST Act. It will therefore take its ordinary meaning. The expression is covered under paragraphs 14 to 28 of GSTR 2003/10.

Paragraph 29 of GSTR 2003/10 provides a summary of what is in an investment form and states:

From the facts given, the medallions are in an investment form because:

§ they are in tradeable form - the medallion is a coin (physical form) in which the metal is capable of being traded on the international bullion market for the metal silver;

§ they bear the accepted mark or characteristic - the stamps on the medallion coins are accepted in the market as identifying its fineness and quality of the metal;

§ the price is determined by the spot price - the medallion coins are traded by reference to the spot price for the time they are traded.

The medallions are therefore considered to be metal in the investment form. However, the definition of precious metal requires that the silver in investment form must be of a specified fineness.

Specified fineness

The definition of 'precious metal' requires that the silver (in an investment form) be of at least 99.5 per cent fineness.

The fineness of the silver in the medallion is 99.999 per cent. The definition of precious metal is therefore satisfied.

Summary:

The silver medallions that you have imported are precious metals as defined in the GST Act.

Question 2

Taxable importation

Section 13-5 of the GST Act provides that an entity makes a taxable importation if:

However, an importation is not a taxable importation to the extent that it is a non-taxable importation.

Goods and Services Tax Ruling GSTR 2003/15 provides guidance on taxable and non-taxable importations under Division 13 of the GST Act.

Paragraphs 30 and 31 of GSTR 2003/15 explain when imported goods are entered for home consumption within the meaning of the Customs and state:

From the information received, paragraphs 13-5(a) and 13-5(b) of the GST Act are met as you are importing the silver medallions for home consumption within the meaning of the Customs Act since you are the owner of the silver medallions in the Import Declaration.

However, the importation of the medallions is not a taxable importation to the extent that it is a non-taxable importation

Non-taxable importation

Under subsection 13-10 of the GST Act, an importation is a non-taxable importation if it would have been a supply that was GST-free or input taxed if it had been a supply.

We shall now determine whether the supply of those medallions in Australia would be GST-free and/or input taxed.

Is the supply of medallions when made in Australia input taxed and/or GST-free?

As discussed in question 1, the silver medallions that you have imported are precious metals as defined in the GST Act. Relevant to the supply of the precious metals is sections 38-385 and 40-100 of the GST Act.

Section 38-385 of the GST Act

A supply of precious metals is GST-free under section 38-385 of the GST Act if:

You have advised that you are not a dealer in precious metals. Section 38-385 of the GST Act is therefore not applicable to you.

Section 40-100 of the GST Act

A supply of precious metal is input taxed under section 40-100 of the GST Act.

Section 40-100 of the GST Act contains no further requirements apart the supply being a supply of precious metal. Accordingly, the supply of the medallions you have imported is an input taxed supply under section 40-100 of the GST Act as these medallions are precious metals as defined in the GST Act.

Summary

Your importation of the medallions is a non-taxable importation under paragraph (b) of section 13-10 of the GST Act and you therefore will not be liable to pay GST on the importation.

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