Edited version of private ruling

Authorisation Number: 1011853269630

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: GST importation of precious metals

Question:

Is your importation of the Country X silver bullion coins and the Country Y silver bullion coins into Australia subject to goods and services tax (GST)?

Answer:

No. You are not making a taxable importation of the Country X silver bullion coins and the Country Y silver bullion coins into Australia, and the importation is not subject to GST.

Relevant facts and circumstances

You are an individual in Australia, who is not registered for GST.

You are not a dealer in precious metals.

You purchased silver bullion coins from a precious metals dealer (supplier) from overseas.

All the bullion coins that you purchased are of 99.9% purity of silver and are investment grade. The bullion coins were purchased at spot price.

The description of the contents of the boxes is:

- 1 x box of Country X silver bullion coins, which are of 99.9% fineness.

- 1 x box of Country Y silver bullion coins, which are of 99.9% fineness.

The supplier is an official gold and silver bullion dealer. The supplier informed that these products are 99.9% purity silver, and sold for investment purposes. You have also provided a copy of the invoice for these products.

- The characteristics of the 'Country X silver coin' as specified are:

- The coin is the purest silver coin in the world with a 99.99% fine silver purity.

- The coin is one of the most recognizable silver coins in the world.

- The coin is backed by the Country X Government and stored in cases of 500, one oz coins.

- The coin has its .9999 (99.99%) purity and 1 oz weight displayed on the coin in English.

- The coin is legal tender in Country X with a face value of 5 Country X dollars.

- The intrinsic silver value of the coin is far higher as the coin is traded all over the world according to the market rate for silver.

- The coin is a highly coveted silver investment vehicle - as the coins are both highly liquid and recognisable.

- On the obverse side of the coin is a sculpture of a monarch, and the reverse side of the coin is the silver maple leaf.

- The coin is often a choice for collectors and investors because of the purity and quality to meet the standards of The Royal Country X Mint.

The characteristics of the 'Country Y silver coin' as specified are:

- The coin comes in sealed mint cases of 500 and in tubes of 20.

- The coin is the legal tender silver coin for the Country Y with a face value, however its intrinsic silver market value is far higher.

- The coin is an extremely liquid silver investment backed by the Country Y Government.

- The coin can be used in legal contracts based on their $1 face value, but the coin is traded according to the market rate for silver.

- The coin is recognized and highly tradable all over the world.

- The coin is .9999 (99.99%) fine silver bullion coins.

- The coin has 1 oz fine silver stamped in English on the coin.

- On the obverse side of the coin is a design of 'a landmark', and the reverse side of the coin is 'a flying bird'.

Reasons for decision

The facts indicate that you have imported the Country X silver bullion coins and the Country Y bullion coins into Australia. We first need to determine if these silver coins are precious metals before determining if your importation of these silver coins is subject to GST.

Precious metals

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

'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.

Goods and Services Tax Ruling GSTR 2003/10: What is 'precious metal' for the purposes of GST? (GSTR 2003/10) covers precious metal for GST purposes. At paragraph 9 of GSTR 2003/10 it states that 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 and of a specified fineness.

Metal silver

In this case, the silver coins (that is, Country X silver bullion coins and the Country Y silver bullion coins are made of the 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 gold, silver or platinum is whether it is traded at a price that is determined by 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 provided, when you purchased the Country X silver bullion coins and the Country Y bullion coins, they were based on spot prices. Accordingly, these silver coins have the character of the 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.

A summary of what is in an investment form is stated at paragraph 29 of GSTR 2003/10 which states:

29. To summarise the above, for gold, silver or platinum to be in an investment form for the purposes of the GST Act, it must be in a form that:

· is capable of being traded on the international bullion market, that is, it must be a bar, wafer or coin;

· bears a mark or characteristic accepted as identifying and guaranteeing its fineness and quality; and

· is usually traded at a price that is determined by reference to the spot price of the metal it contains.

The Country X silver bullion coins and the Country Y bullion coins are 'in an investment form' because:

· they are in tradeable form - They are coins (physical form) in which the silver is capable of being traded on the international bullion market for the metal silver;

· they bear the accepted mark or characteristic - The coins are stamped which are accepted in the market as identifying its fineness and quality of the metal;

· their price is determined by the spot price - The silver coins are traded by reference to the spot price for the time they are traded.

Further, paragraphs 37 to 47 of GSTR 2003/10 discuss 'coins', and provide that coins can be manufactured to two standards, namely proof and bullion quality. Proof coins are marketed as collectables, whilst bullion coins are for trading market. The major factors that differentiate bullion coins from proof or numismatic or collectors' coins include:

· 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 bullion coins is determined by reference to the prevailing spot price of the metal they contain. The price for proof coins is determined in reference to spot price and also the additional value arising from their physical characteristics (associated with quality of finish and condition). The price for numismatic or other collectors' coins 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. Individual numismatic coins are also influenced by their condition. For bullion coins, the stamping only establish their worth in terms of their metal value - guarantees their fineness and the backing of government as currency.

· 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.

· Bullion coins are considered to be an alternative investment product to bullion bars and wafers. They are traded by many banks, bullion dealers and brokers. Proof coins and other numismatic or collectors' coins are primarily traded by coin dealers.

On the basis of the facts available in relation to the Country X silver coins and the Country Y coins that you purchased, they are traded on the basis of their spot prices and not on numismatic, commemorative or rarity value; they are freely available; and are investment products traded on the world markets. These silver coins have the characteristics of bullions coins.

Accordingly, the Country X silver bullion coins and the Country Y bullion coins are considered to be silver in the investment form. Further, 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 99.9% fineness.

The fineness of the Country X silver bullion coins and the Country Y bullion coins that you have purchased are of .9999 (99.99%) fine silver purity. This satisfies the required 99.9% fineness in the definition of precious metal.

Accordingly, the Country X silver bullion coins and the Country Y bullion coins are precious metals as defined in section 195-1 of the GST Act, and you are importing precious metals.

Importation

Section 13-5 of the GST Act states:

You make a taxable importation if:

(a) goods are imported; and

(b) you enter the goods for home consumption (within the meaning of the Customs Act 1901)

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

The meaning of a non-taxable importation is covered in section 13-10 of the GST Act:

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.

We need to consider whether the supply of the Country X silver bullion coins and the Country Y bullion coins would have been a supply that was GST-free or input taxed, if it had been a supply.

Of relevance to the supply of precious metals are 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:

(a) it is the first supply of that precious metal after its refining by, or on behalf of, the supplier; and

(b) the entity that refined the precious metals is a refiner of precious metal; and

(c) the recipient of the supply is a dealer in precious metals.

You have advised that you are not a dealer in precious metals, and therefore section 38-385 of the GST Act is 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 from the supply being a supply of precious metal.

The supply of the Country X silver bullion coins and the Country Y bullion coins would have been an input taxed supply under section 40-100 of the GST Act.

Summary

Accordingly, your importation of the Country X silver bullion coins and the Country Y bullion coins is a non-taxable importation under paragraph 13-10(b) of the GST Act, and you are not liable to pay GST on this importation.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).