Edited version of your private ruling

Authorisation Number: 1012494674507

Ruling

Subject: GST and importation of silver bullion bars

Question 1

Is goods and services tax (GST) payable on the importation into Australia of the silver bullion bars?

Answer

No. the importation into Australia of the silver bullion bars will be a non-taxable importation.

Relevant facts and circumstances

You are registered for GST.

You wish to import silver bullion bars into Australia.

You advise that the bars are 100oz. 99.9% pure bullion silver bars.

You state that the bars bear internationally accepted minted identification marks guaranteeing its 99.9% fineness and quality

The 100oz silver bars are the type usually traded on the international bullion market at the spot price.

The entity importing the silver bullion bars is not a dealer or refiner in precious metals.

The silver bullion bars were purchased purely as an investment with the expectation of sale at some future date dependant upon favourable market forces.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-1

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 39-385

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

Reasons for decision

Summary

The importation of the silver bullion bars will be a non-taxable importation and therefore no GST will be payable upon their importation into Australia.

Detailed reasoning

Under section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you make a taxable importation if:

· goods are imported and

· you enter the goods for home consumption

However, under section 13-10 of the GST Act, an importation is a non-taxable importation if

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

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

Precious metal

Section 195-1 of the GST Act provides a definition of precious metal. It states:

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.

You have advised that the silver bullion bars in question are 99.9% fineness. Hence, it is necessary to determine whether the silver bullion bars are in an investment form.

Investment form

The ATO view of 'in an investment form' for GST purposes is provided by the Goods and Services Tax Ruling 'What is 'precious metal' for the purposes of GST?' (GSTR 2003/10). The ruling discusses in detail what is considered to be a precious metal and when the precious metal is considered to be 'in an investment form'. (A copy of GSTR 2003/10 is included for your reference).

Paragraph 29 provides a summary of what is 'in an investment form'. It 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.

In your case, the silver bullion bars are in a form that is capable of being traded on the international market. You state that the bars bear internationally accepted minted Identification marks guaranteeing its 99.9% fineness and quality, and you advise that the bars are traded at a value determined by reference to the spot price.

Therefore, in this case, given that the above requirements regarding 'in an investment form' are satisfied, the silver bullion bars satisfy the definition of a precious metal as provided in the GST Act.

A supply of a precious metal can be a GST-free supply or an input-taxed supply for GST purposes. It is therefore now necessary to determine if the supply of the silver bullion bars in this case are a GST-free supply or an input taxed supply.

GST-free

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, and

· 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.

You have advised that the recipient of the supply is not a dealer or refiner in precious metal. Also the importation of the precious metal is not the first supply after refining. Therefore the supply cannot be a GST-free supply.

Input-taxed

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

Whereas a GST-free supply of precious metal under section 38-385 of the GST Act will involve a first supply from a refiner of precious metals to a dealer of precious metal, an input taxed supply of precious metal under section 40-100 contains no further requirements and merely requires a supply of precious metal.

A supply of precious metal that satisfies section 40-100 of the GST Act will be input taxed.

Therefore, as the silver bullion bars are considered to be a precious metal, the supply will be an input taxed supply.

If a supply is input-taxed then there is no GST payable on the supply and there is no entitlement to an input tax credit for anything acquired in making the supply.

In this case, the entity wishes to import the silver bullion bars into Australia.

GST and Importations

Under section 13-5 of the GST Act, you make a taxable importation if:

· goods are imported and

· you enter the goods for home consumption

However, under 13-10 of the GST Act, an importation is a non-taxable importation if

· it is a non-taxable importation under Part 3-2 or

· it would have been a supply that was GST-free or input taxed if it had been a supply.

As the silver bullion bars to be imported, are considered to be a precious metal, the supply of which is input-taxed, the importation of those silver bullion bars into Australia will be a non-taxable importation and no GST will be payable.