Edited version of private ruling

Authorisation Number: 1011659360285

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Ruling

Subject: GST and import of precious metals

Summary

Under section 38-385 of the GST Act first supply of precious metal by a refiner of a precious metal is GST-free provided the recipient is a dealer in the precious metal. As you are not a dealer the precious metals will not be a GST-free supply under section 38-385 of the GST Act.

As the supply of Bars will not be GST-free under section 38-385 of the GST Act, the supply of precious metals will be input taxed in accordance with section 40-100 of the GST Act.

Detailed reasoning

Taxable supply and creditable acquisition

GST is payable on taxable supplies. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that:

You make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

(c) the supply is *connected with Australia ;and

(d) you are *registered, or *required to be registered.

 

However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

 

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

An entity only makes a taxable supply if all of the above criteria are satisfied

Section 11-20 of the GST Act provides that the entity that makes a creditable acquisition is the one entitled to the input tax credit.

Section 11-5 of the GST Act defines a creditable acquisition as:

You make a creditable acquisition if:

(a)  you acquire anything solely or partly for a *creditable purpose; and

(b)  the supply of the thing to you is a *taxable supply; and

(c)  you provide, or are liable to provide, *consideration for the supply; and

(d)  you are *registered, or *required to be registered.'

Section 11-15 of the GST Act provides that an acquisition is for a creditable purpose if it is for the purposes of carrying on an enterprise and is not related to making supplies that would be input taxed, or are of a private or domestic nature.

Taxable Importation

Under Division 13 of the GST Act provides that GST is payable on importations of goods into Australia where the importation is a taxable importation. You make a taxable importation if you enter goods imported into Australia for home consumption within the meaning of the Customs Act 1901 (Customs Act).

However the GST Act provides that some importations are not taxable. These are:

§ goods that would have been GST-free or input taxed if supplied within Australia such as basic food, certain medical aids and appliances, cars for use by certain people with disabilities, and precious metals, or

§ goods that qualify for certain customs duty concessions.

Precious metals and investment form

Section 38-385 of the GST Act provides that a supply of 'precious metal' 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 metal is a refiner of precious metal; and

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

 

Any subsequent supply of that precious metal will be input taxed in accordance with section 40-100 of the GST Act.

Precious metal as defined under section 195-1 of the GST Act 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.

Paragraph 10 of the Goods and Services Tax Ruling GSTR 2003/10 explains that to be a precious metal, a thing must be the metal gold, silver, or platinum of specified fineness.

Section 38-385 of the GST accords GST-free status to certain supplies of precious metal. To have this GST-free status one of the requirements is that the metal has been refined by a refiner of precious metal. To be a refiner of precious metal, an entity has to satisfy the Commissioner that the entity regularly converts or refines precious metal in carrying on its enterprise.

Another requirement is that the supply is made to a dealer in precious metal. To be a dealer in precious metal, an entity has to satisfy the Commissioner that a principal part of carrying on the entity's enterprise is the regular supply and acquisition of precious metal.

Metals gold, silver or platinum of specified fineness can only be termed as precious metals if they are in investment form. The term investment form is not defined in the GST Act. According to paragraph 14 of GSTR 2003/10 the expression 'investment form' takes its ordinary meaning from the context in which it is used. Colloquially, the expression can be defined as a form in which an item is capable of being held as an investment. While jewellery made of gold, silver or platinum may be held as an investment, the term must be read in the context of the precious metal provisions.

Paragraph 20 of GSTR 2003/10 further explains the expression in an investment form means the metal must be in a physical form that is capable of being traded on the international market for that metal by traders in that metal in that market. The relevant traders are therefore the banks, bullion dealers, commodity brokers and stockbrokers that generally deal in gold, silver or platinum in the bullion market.

You do not carry on an enterprise of dealing in precious metals but you are considering importing on a regular basis. You purchased your precious metal directly from the refiner in investment form.

This means that you are not liable to pay GST on the value of the precious metals you import and also you cannot claim input tax credits for any GST paid on the acquisitions.