Edited version of your written advice

Authorisation Number: 1051466351721

Date of advice: 23 January 2019

Ruling

Subject: GST and precious metal

Question 1

Is your importation of gold and silver bars a non-taxable importation under subsection 13-10(b) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes

Question 2

Will your subsequent sale of the gold and silver bars to Australian retail customers be input taxed under section 48-100 or GST-free under section 38-385 of the GST Act?

Answer

Yes, the subsequent sale will be input taxed under section 48-100 of the GST Act.

Relevant facts and circumstances

You are a retail dealer in precious metals and rare coins, and are registered for GST.

You currently acquire precious metals from precious metal refiners for sale to Australian retail customers.

The supply and acquisition of precious metals constitute most of your business currently and will continue to form a large part of your business activities for the longer term.

You are planning to engage an accredited refiner overseas to refine gold and silver bars of 99.99% fineness. After refinement, these gold and silver bars will be imported by you into Australia.

The only difference between a normal buying transaction and this arrangement is that you require the refiner to produce the bars with your brand name on them.

After importing these bars, you will then sell the bars to the Australian retail customers in the near future. You have the intention to develop the brand and make the bars available internationally in the long term.

These gold and silver bars will bear a hallmark that is accepted as identifying and guaranteeing fineness and weight of each bar.

The gold and silver bars will be purchased and sold for the character of the metal itself and not its collection purpose, rarity or condition.

The gold and silver bars will be traded at a price determined by reference to the spot price.

Relevant legislative provisions

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

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

Question 1

Under subsection 13-10(b) of the A New Tax System (Goods and Services Tax) Act 1999 (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.

We need to determine whether the supply the gold and silver bars that your import into Australia would have been GST-free and/or input taxed had that supply been made in Australia.

Would the supply of the gold and silver bars when made in Australia be input taxed and/or GST-free?

In determining whether a supply of gold and silver bars would be GST-free or input taxed, it needs to be established whether these gold and silver bars are precious metal for GST purposes.

‘Precious metal’ is defined in section 195-1 of the GST Act as follows:

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.

In your case, the bars you are importing are gold and silver bars that are of 99.99% fineness, therefore they will be precious metal if they are in investment form.

Paragraph 22 and paragraphs 34 to 36 of GSTR 2003/10 discuss when bars are traded in an investment form and state:

22. Bars, wafers and bullion coins are the physical forms in which the metals gold, silver and platinum are traded on the international bullion market for those metals. These are therefore forms of those metals that are capable of being traded on the international bullion market.

34. Bars and wafers that are hallmarked with hallmarks listed in the ICGB bear an accepted mark as to their fineness and quality. The list of hallmarks in the ICGB is not exhaustive. There are other hallmarks, such as the ABC hallmark, that are accepted as guaranteeing fineness and quality.

35. Such bars and wafers are produced at varying weights. If they are in a form traded at prices determined by reference to the spot price, such bars and wafers are in an investment form. If so, and they are of gold, silver or platinum of the requisite fineness, they are precious metal for the purposes of the GST Act.

In your case, the gold and silver bars will be produced by an accredited refiner and bear the following characteristics:

(1) 99.99% fineness;

(2) bear a hallmark that is accepted as identifying and guaranteeing fineness and weight of each bullion bar;

(3) will be capable to be traded on the Australian bullion market;

(4) will be purchased and sold for the character of the metal itself and not its collection purpose, rarity or condition. The price of the gold and silver bullion bars will be based on spot prices.

Therefore the gold and silver bars to be produced will be in an investment form as per GSTR 2003/10 and meet the definition of precious metal according to section 195-1 of the GST Act.

As these bars are precious metals for GST purposes, relevant provisions to the supply of the precious metals are sections 38-385 and 40-100 of the GST Act.

Section 38-385 of the GST Act

A supply of precious metals is GST-free under section 38-385 of the GST Act 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 metals.

You are a retail dealer in precious metals and rare coins. The refiner who will refine the gold and silver bars is an accredited refiner and you will acquire these bars from them after its refinement. Therefore a supply of the gold and silver bars to you would be a GST-free supply had that been a supply in Australia as the requirements in section 38-385 of the GST Act are satisfied.

Section 40-100 of the GST Act

A supply of precious metal is input taxed under section 40-100 of the GST Act. Section 40-100 of the GST Act contains no further requirements apart from the supply being a supply of precious metal. Accordingly, the as the supply of the gold and silver bars is a supply of precious metal the supply would be an input taxed supply.

The supply of the gold and silver bars that you will import into Australia would be a GST-free and/or input taxed had that been a supply made in Australia, As a result your importation of the gold and silver bars is a non-taxable importation under subsection 13-10(b) of the GST Act.

Question 2

Section 40-100 of the GST Act states:

A supply of precious metals is input taxed.

Note: If the supply is the first supply of precious metals after refinement, the supply is GST-free under section 38-385.

As stated previously, the gold and silver bars that you will be importing are precious metals for GST purposes.

Paragraph 7 of GSTR 2003/10 explains that the first supply of precious metal after its refining may be GST-free under section 38-385. Apart from transactions that fall within the ambit of section 38-385 (or section 38-185, which is about exported goods), supplies of precious metal are input taxed under section 40-100.

Given you will supply these bars to Australian retail customers after importing them into Australia, the supply to the retail consumers is not the first supply of precious metals after refinement. As a result, the supply will not be GST-free under section 38-385 of the GST Act, rather the supply of the gold and silver bars to Australian retail customers will be input taxed under section 40-100 of the GST Act.