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Ruling

Subject: Importation of coins

Question

Are you making a non-taxable importation under paragraph 13-10(b) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when you import the silver and gold coins into Australia?

Answer:

No.

The importation of the gold and silver coins is not a non-taxable importation under paragraph 13-10(b) of the GST Act. The importation of the gold and silver coins is a taxable importation under section 13-5 of the GST Act.

Relevant facts:

· You do not have an Australian Business Number and are not registered for goods and services tax (GST).

· You purchased gold and silver coins from overseas and imported them into Australia for home consumption

· You confirm you are not a dealer in precious metal and you acquire the coins for investment purposes.

· The custom agent cleared the goods with Customs on your behalf and brought the goods into Australia.

· The custom agent charged GST for the importation of these coins.

· The silver coins have .9999 and .999 fine silver and are issued by foreign government. 

· You also purchased .999 gold coins which have legal tender value.

· The price of the silver coins has a premium value over the silver spot price.

· The silver coins are supplied in a strict and low mintage release and are designed and in brilliant uncirculated conditions.

· The gold coins have .999 gold fineness.

· The gold coins are supplied in brilliant uncirculated condition and are sealed in their original plastic (as issued by the mint).

· All the coins are government minted with legal tender.

· The price for the gold coins has a premium over the metal spot price.

· You advised that the coins have a premium value over the metal spot price because of the government mint charges and the age of the coins. 

Reasons for decisions

Section 13-5 of the GST Act provides that the importation of goods into Australia is subject to GST if they are entered for home consumption within the meaning of the Customs Act 1901. However, the importation is not subject to GST if it is a non-taxable importation.

The meaning of "non-taxable importation" is provided in section 13-10 of the GST Act and it states:

An importation is a non-taxable importation if:

(a) it is a non-taxable importation under Part 3-2; or

(b) it would have been a supply that was *GST-free or *input taxed if it had been a supply.

* denotes a defined term in the GST Act

Division 42 in Part 3-2 of the GST Act lists goods which are non-taxable importation. The coins imported by you are not listed as non-taxable goods under Division 42 of the GST Act.

Under paragraph 13-10(b) of the GST Act, an importation is a non-taxable importation if, had the importation been a supply (in Australia), the supply would have been GST-free or input taxed. You may find further information on non-taxable importation of goods into Australia in Goods and Service Tax Ruling GSTR 2003/15.

For your information the first supply of precious metal after its refining may be GST-free under section 38-385 of the GST Act. Subsequent supplies of the precious metal are input taxed under section 40-100 of the GST Act. In both of these cases, the importation these precious metals into Australia are non-taxable importation under paragraph 13-10(b) of the GST Act.

In your case you imported gold coins which have .999 gold fineness and silver coins which also have .9999 and .999 fine silver. Therefore we need to consider whether the coins are a precious metal for GST purposes.

Precious metal

The ATO's view on precious metal is provided in GSTR 2003/10. Paragraphs 8 to 10 of GSTR 2003/10 state:

8. Precious metal is defined in section 195-1 as follows:

'precious metal means:

(a) gold (in an investment form) of at least 99.5% fineness; or

(b) silver (in an investment form) of at least 99.9% fineness; or

(c) platinum (in an investment form) of at least 99% fineness; or

(d) any other substance (in an investment form) specified in the regulations of a particular fineness specified in the regulations.'

9. No regulations have been made to specify any other substance. To be precious metal for GST purposes, the metal must therefore be gold, silver or platinum.

10. 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.

Therefore, to be a precious metal for GST purposes the coins must satisfy 2 conditions. They are:

· the coins must be made from metal gold, silver, or platinum of specified fineness. The gold coins must be 99.5% fineness and the silver coins must be 99.9% fineness, and

· the coins must also be in an investment form

The coins you imported satisfy the first condition as they are metallic gold and silver coins with 99.9% fineness. The next issue is whether the coins are in an investment form.

Investment form

Paragraphs 14 to 31 of GSTR 2003/10 provide an explanation for "investment form" for the purposes of defining precious metal under section 195-1 of the GST Act. The metal is in an investment form if the coins are being traded on the international market for the metal. If setting the price of the trade is other than the fineness of the metal, the coins are not traded as precious metal.

Paragraph 30 of GSTR 2003/10 provides that gold, platinum or silver coins can be manufactured to two standards, namely proof and bullion quality. Proof coins are marketed as collectables, whilst bullion coins are for the trading market for the metal that is for investment purposes.

Paragraphs 37 to 42 of GSTR 2003/10 provide an explanation on the coins and paragraph 38 of GSTR 2003/10 outlines the differences between proof coins and bullion coins. It states:

(a) Bullion coins are traded on the basis of their metal content, whereas proof or other numismatic or collectors' coins are traded on the basis of their numismatic, commemorative or rarity value. The price of gold, silver or platinum bullion coins is determined by reference to the prevailing spot price of the gold, silver or platinum they contain. In the case of numismatic or other collectors' coins, their value varies in accordance with the supply and demand for these items based on their novelty and rarity, as well as being influenced by movements in the metal price. The price for individual numismatic coins is also influenced by the condition of the coin. The price for proof coins is determined in reference to the spot price and also the additional value arising from their physical characteristics; they are exact reproductions, without flaws. Whereas for bullion coins the stamping only establishes their worth in terms of their metal value - the stamping only guarantees their fineness and the backing of government as currency. For proof coins, the additional quality of the finish is not related to the fineness and quality of the metal, but adds a further value associated with the quality of the finish and condition;

(b) Bullion coins are mass produced and freely available. This enables them to be freely traded in world markets. In contrast, the minting of proof coins is limited; and

(c) Bullion coins are considered to be an alternative investment product to bullion bars and wafers. They are traded by many banks, bullion dealers, commodity brokers and stockbrokers. Proof coins and other numismatic or collectors' coins, on the other hand, are primarily traded by coin dealers.

Based on the information provided, we consider that the gold and silver coins you imported are proof coins for collection purposes. They are not in investment form.

The silver coins are supplied in a strict and low mintage release and are designed and in brilliant uncirculated conditions. The prices have a premium value over the silver spot price.

The gold coins are supplied in brilliant uncirculated condition and are sealed in their original plastic (as issued by the mint).The prices have a premium over the metal spot price.

Paragraphs 39 to 42 of GSTR 2003/10 outline the different treatment of bullion coins as opposed to proof and numismatic for GST purposes. In particular paragraph 42 of GSTR 2003/10 states:

There are coins, such as some commemorative coins, that are marketed in the retail market as 'bullion' coins because they are made from bullion. Such coins are not bullion coins for the purposes of this Ruling. Whether a coin is precious metal does not depend on whether the coin is called a bullion coin or a proof or numismatic coin. The relevant test is not what the coin is called but whether it has the character of the metal. This will be determined, as noted above, by whether it is traded for its metal content or for other reasons.

Based on the above we have concluded that the silver coins and the gold coins are proof coins and purchased for collection purposes. The prices have a premium value above the metal spot price and reflect the supply and demand for these coins based on their condition, novelty and rarity.

Therefore, the gold and silver coins you imported into Australia do not satisfy the test for "investment form" and are therefore not "precious metal" as defined in section 195-1 of the GST Act.

As the coins are not precious metal for GST purposes, section 38-385 of the GST Act and section 40-100 of the GST Act do not apply to the supplies of these gold and silver coins. Therefore paragraph 13-10(b) of the GST Act does not apply to the importation of these gold and silver coins. The importation of these coins will be taxable importation under section 13-5 of the GST Act.

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