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Edited version of your written advice
Authorisation Number: 1012769980516
Ruling
Subject: Goods and services tax (GST) and palladium bullion and diamonds.
Question 1
Is the sale of palladium in bullion form subject to GST?
Answer
Yes, provided that:
• the seller sells the palladium bullion in the course or furtherance of a business that it carries on
• the supply is connected with Australia
• the seller is registered or required to be registered for GST, and
• the supply is not GST-free under the export provision - section 38-185 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
There is no GST exemption for the sale of palladium bullion.
Question 2
Is a purchaser of palladium in bullion form entitled to a Tourist Refund Scheme (TRS) refund if they leave Australia with the palladium bullion?
Answer
Yes, if:
• the purchaser seeks a TRS refund
• the seller sells the palladium bullion in the course or furtherance of a business that it carries on
• the seller is registered or required to be registered for GST
• the purchaser leaves Australia and exports the palladium bullion from Australia as accompanied baggage within 60 days after the date they purchased the bullion in Australia
• the purchase price of the palladium bullion is at least $300
• the purchaser holds a tax invoice, and
• the Customs officer considering the TRS claim is satisfied that the purchaser has met the requirements for receiving a TRS refund.
Note that the entity claiming the TRS refund must have made a genuine purchase from another entity.
Question 3
Is the sale of loose diamonds subject to GST?
Answer
Yes, if:
• the seller sells the diamonds in the course or furtherance of a business that it carries on
• the supply is connected with Australia
• the seller is registered or required to be registered for GST, and
• the supply is not GST-free under the export provision - section 38-185 of the GST Act.
There is no GST exemption for the sale of diamonds
Question 4
Is a purchaser of loose diamonds entitled to a TRS refund if they leave Australia with the diamonds?
Answer
Yes, if:
• the purchaser seeks a TRS refund
• the seller sells the diamonds in the course or furtherance of a business that it carries on
• the seller is registered or required to be registered for GST
• the purchaser leaves Australia and exports the diamonds from Australia as accompanied baggage within 60 days after the date they purchased them in Australia
• the purchase price of the diamonds is at least $300
• the purchaser holds a tax invoice, and
• the Customs officer considering the TRS claim is satisfied that the purchaser has met the requirements for receiving a TRS refund.
Note that the entity claiming the TRS refund must have made a genuine purchase from another entity.
Relevant facts and circumstances
You are not registered for GST.
You frequently travel to overseas and on many of these occasions you have elected to claim a GST refund under the Tourist Refund Scheme at the airport and on each occasion you have met every criteria outlined in order to be eligible to make a claim under this scheme.
You primarily take palladium in bullion form and loose diamonds out of Australia.
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 9-5
A New Tax System (Goods and Services Tax) Act 1999 section 9-40
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
A New Tax System (Goods and Services Tax) Act 1999 Division 168
A New Tax System (Goods and Services Tax) Regulations 1999 regulation 168
Reasons for decisions
Question 1
Summary
There is no GST exemption for the sale of palladium bullion.
Detailed reasoning
GST is payable on taxable supplies.
You make a taxable supply if you meet the requirements of section 9-5 GST Act, which states:
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 that is defined in section 195-1 of the GST Act)
A sale meets the requirement of paragraph 9-5(a) of the GST Act because there is consideration for a supply.
A sale of precious metal as defined in section 195-1 of the GST Act is potentially GST-free under section 38-385 of the GST Act or input taxed under section 40-100 of the GST Act.
Precious metal is defined in section 195-1 of the GST Act as:
(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.
The GST regulations do not specify any substance for the purposes of paragraph (d) of the definition of precious metals.
As palladium is not gold, silver or platinum, it cannot meet the definition of precious metal in the GST Act. Therefore, a sale of palladium bullion is not exempt from GST under the precious metals exemptions (section 38-385 or section 40-100 of the GST Act). There are no other GST exemptions that apply to the sale of palladium bullion.
Where goods are sold in Australia and the purchaser exports the goods from Australia and certain other requirements are met, the sale is GST-free under section 38-185 of the GST Act. If the purchaser seeks a TRS refund, the export exemption will not apply.
Therefore, the sale of palladium bullion is subject to GST if:
• the seller sells the bullion in the course or furtherance of a business that it
carries on
• the bullion is sold in Australia
• the seller is registered or required to be registered for GST, and
• the sale is not GST-free under the export exemption.
Question 2
Summary
The purchase of palladium bullion is eligible for a TRS refund.
Detailed reasoning
In accordance with Division 168 of the GST Act and regulation 168 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations), a purchaser of palladium bullion is entitled to a TRS refund if:
• the purchaser seeks a TRS refund
• the seller sells the bullion in the course or furtherance of a business that it carries on
• the seller is registered or required to be registered for GST
• the purchaser leaves Australia and exports the bullion from Australia as accompanied baggage within 60 days after the date they purchased the bullion in Australia
• the purchase price of the palladium bullion is at least $300
• the purchaser holds a tax invoice, and
• the Customs officer considering the TRS claim is satisfied that the purchaser has met the requirements for receiving a TRS refund.
Question 3
Summary
There is no GST exemption for the sale of loose diamonds.
Detailed reasoning
There are no GST exemptions for the sale of loose diamonds. Therefore, a sale of loose diamonds is subject to GST if:
• the seller sells the diamonds in the course or furtherance of a business that it carries on
• the diamonds are sold in Australia
• the seller is registered or required to be registered for GST, and
• the supply is not GST-free under the export exemption.
Question 4
Summary
The purchase of loose diamonds is eligible for a TRS refund
Detailed reasoning
In accordance with section 168 of the GST Act and Regulation 168 of the GST Regulations, a purchaser of loose diamonds is entitled to a TRS refund if:
• the purchaser seeks a TRS refund
• the seller sells the diamonds in the course or furtherance of a business that it carries on
• the seller is registered or required to be registered for GST
• the purchaser leaves Australia and exports the diamonds from Australia as accompanied baggage within 60 days after the date they purchased them in Australia
• the purchase price of the diamonds is at least $300
• the purchaser holds a tax invoice, and.
• the Customs officer considering the TRS claim is satisfied that the purchaser has met the requirements for receiving a TRS refund.
Customs is responsible for administering the TRS scheme.