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Ruling

Subject: GST and importation of precious metals

Question

Do you have to pay GST on the importation of precious metal bullion coins, bars, wafers and rounds into Australia?

Answer

No, provided that the metal bullion coins, bars, wafers and rounds that you import are 'precious metal' for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Relevant facts and circumstances

Over the next decade you intend to buy precious metal coins, bars, wafers and rounds from various international mints and refiners.

The coins, bars, wafers and rounds will meet the minimum, purity requirements of precious metal as defined in the GST legislation (gold 99.5%, silver 99.9%, platinum 99%).

All the coins, bars, wafers and rounds shall be in an investment form as defined in Goods and Services Tax Ruling Goods and Services Tax: What is 'precious metal' for the purposes of GST (GSTR 2003/10).

The coins will be of bullion grade as defined in paragraphs 37 and 38 of GSTR 2003/10.

You are not a dealer in precious metals. You are a member of the general public who wishes to invest in precious metals.

You hope to profit by eventually selling the coins, bars, wafers and rounds at a higher spot price than originally purchased for.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)

A New Tax System (Goods and Services Tax) Act 1999 section 13-5

A New Tax System (Goods and Services Tax) Act 1999 section 13-10

A New Tax System (Goods and Services Tax) Act 1999 section 13-15

A New Tax System (Goods and Services Tax) Act 1999 section 38-385

A New Tax System (Goods and Services Tax) Act 1999 section 40-100

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision

Summary

You do not have to pay GST on the importation of precious metal bullion coins, bars, wafers and rounds into Australia provided that the items that you import are 'precious metal' for the purposes of the GST Act.

Detailed reasoning

Precious metal

The term 'precious metal' is defined in section 195-1 of the 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.

GSTR 2003/10 provides guidance on what is 'precious metal' for the purposes of the GST Act.

As stated in paragraph 10 of GSTR 2003/10, 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.

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.

The metal gold, silver or platinum

Paragraph 11 of GSTR 2003/10 provides that to be the metal gold, silver or platinum, the item must have the character of the metal rather than the character of a thing made from the metal. Items such as jewellery that happen to be made of gold, silver or platinum are not gold, silver or platinum for the purposes of the definition of precious metal in the GST Act.

At paragraph 12, GSTR 2003/10 provides that 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. This suggests that it does not have the character of the relevant metal. 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. The price is not determined solely by the metal value of the coin. The price is determined by reference to the spot price and by reference to the quality of the physical characteristic of the coin. This means that proof coins are not precious metal.

Paragraph 13 of GSTR 2003/10 provides that other numismatic coins are usually traded at prices largely determined by their rarity, condition and beauty. They are not traded at a price largely determined by reference to the prevailing spot price for the relevant metal. This indicates that they are not traded for their metal value only and therefore they do not have the character of the metal gold, silver or platinum. They have the character of coins made from those metals. Therefore, they are not precious metal.

Investment form

The phrase 'in an investment form' is not defined in the GST Act and it will therefore take its ordinary meaning from the context in which it is used.

Paragraphs 14 to 33 of GSTR 2003/10 discuss the meaning of the phrase 'investment form'.

A summary of what is in an investment form is provided 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.

You advised that all the coins, bars, wafers and rounds that you intend to import will be in an investment form as defined in GSTR 2003/10. You also stated that the coins will be of bullion grade as defined in paragraphs 37 and 38 of GSTR 2003/10.

Specified fineness

The definition of 'precious metal' requires that the metal gold, silver or platinum is of specified fitness as stated in section 195-1 of the GST Act.

You advised that the coins, bars, wafers and rounds that you intend to import will meet the minimum, purity requirements of precious metal as defined in the GST Act (gold 99.5%, silver 99.9%, platinum 99%).

Conclusion

The metal coins, bars, wafers and rounds that you intend to import will be regarded as precious metal for GST purposes where they meet the definition of precious metal in section 195-1 of the GST Act.

Importation

Pursuant to subsection 7-1(1) of the GST Act, GST is payable on taxable importations.

Section 13-15 of the GST Act provides that you must pay the GST payable on any taxable importation that you make.

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.

(* denotes a term defined in section 195-1 of the GST Act)

The meaning of a non-taxable importation is set out in section 13-10 of the GST Act which 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.

In accordance with paragraph 13-10(b) 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.

Accordingly, we need to determine whether the importation of the coins, bars, wafers 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

Section 38-385 of the GST Act states that a supply of precious metals is GST-free 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 metal.

You 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

Section 40-100 of the GST Act states that 'a supply of precious metal is input taxed'.

In your case, if your importations of the coins, bars, wafers and rounds, that meet the definition of precious metal for the purposes of the GST Act, had instead been supplies, these supplies would have been input taxed under section 40-100 of the GST Act. Hence, you will satisfy the requirement of paragraph 13-10(b) of the GST Act, and your importation of the coins, bars, wafers and rounds will be a non-taxable importation. Consequently, your importation of these items will not be a taxable importation under section 13-5 of the GST Act, and GST will not be payable by you on these importations.

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