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Edited version of your private ruling
Authorisation Number: 1012466922869
Ruling
Subject: GST and precious metal
Question
Are you entitled to claim input tax credits (GST credits) on your purchase of a product (Product) made from a particular type of precious metal?
Answer
No. The supply of the Product to you will be a GST-free supply of precious metal and therefore not a creditable acquisition.
Relevant facts and circumstances
· You are registered for goods and services tax (GST).
· You carry on an enterprise as a dealer in a particular type of precious metal.
· You are to purchase the Product from an entity.
· The precious metal making up the Product has a particular fineness.
· The Product shows an international exchange currency code and the precious metal's fineness.
· The Australian business register shows that the Product's supplier is registered for GST.
· The Product's supplier is a refiner of the precious metal and this will be the first sale of the refined metal making up the Product.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) 1999
Section 11-5
Section 11-20
Section 38-385
Section 195-1.
Reasons for decision
Under section 11-20 of the GST Act, you are entitled to claim GST credits for any creditable acquisition that you make. One of the requirements under section 11-5 of the GST Act for an acquisition to be creditable is that the supply to you is taxable (and not GST-free or input taxed).
In your case, you are to purchase the Product to use in your enterprise as a precious metal dealer.
The supply of the metal used in making the Product can in certain circumstances be GST-free or input taxed as a precious metal. Therefore, it is necessary for GST purposes to determine whether the Product would qualify to be treated as precious metal.
Precious metal
Under section 195-1 of the GST Act, a metal can be treated as a precious metal provided it is gold, silver or platinum, is in investment form and meets a certain level of fineness as given in section 195-1.
In this case, the Product is one of the metal listed and has a particular fineness as required by section 195-1 of the GST Act. Hence, it is only necessary to determine whether the Product is in an investment form.
Investment form
The Australian Taxation Office's view on precious metal is provided by the public ruling GSTR 2003/10. Paragraph 29 of GSTR 2003/10 lists three requirements relating to precious metal and investment form and provides that precious metal is in an investment form if it:
· 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.
In this case, the Product is in a form that is capable of being traded on the international bullion market; it bears marks guaranteeing its fineness and quality and is traded at a value determined by reference to the spot price of the metal it contains.
Given that the above requirements are satisfied, the Product is in an investment form. It is now necessary to determine if the supply of the Product is GST-free as precious metal.
GST-free supply
A supply of a precious metal is GST-free under section 38-385 of the GST Act provided:
· it is the first supply of that precious metal after its refining by, or on behalf of, the supplier
· the entity that refined the precious metal is a refiner of precious metal, and
· the recipient of the supply is a dealer in precious metal.
In this case, this will be the first supply of the refined metal making up the Product. The Product's supplier is also a refiner of the precious metal and you are a dealer in the precious metal.
As a consequence of satisfying the requirements of section 38-385 of the GST Act, the supply of the Product to you would be a GST-free supply of precious metal.
Consequently, you would not be entitled to claim any GST credits on the acquisition of the Product under section 11-20 of the GST Act.
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