Edited version of private advice

Authorisation Number: 1051893154349

Date of advice: 2 September 2021

Ruling

Subject: GST and importation of xxxx xxxx

Question

Is your importation of the xxxx xxxx 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. The xxxx xxxx you have imported are non-taxable importations under subsection 13-10(b) of the GST Act as these xxxxs are precious metals for GST purposes and the supply of these xxxx xxxx would be input taxed under section 40-100 of the GST Act.

Relevant facts

You are not a dealer in precious metal and are not registered for GST.

You purchased some .XXX pure xxxx xxxx from an overseas company and imported them in Australia. The prices of these xxxxs were determined solely on their metal content plus a dealer mark-up and are derived from the spot price of the xxxx.

These xxxxs are purely investment form of xxxx bullion and have no numismatic collectors' value attached to them. The xxxxs are freely available and are sold to the general public via the overseas company's website.

The xxxxs carry all the required markings describing purity, weight and xxxx content. The purity of the xxxx is XX.XX%

Relevant legislative provisions

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 38-385

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

Reasons for decision

Note: Where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in section 195-1 of the GST Act.

Summary

Your importation of the xxxx xxxx is a non-taxable importation under paragraph (b) of section 13-10 of the GST Act and you therefore will not be liable to pay GST on the importation.

Detailed reasoning

Section 13-5 of the GST Act provides that an entity makes a taxable importation if:

(a)          goods are imported goods; and

(b)          the entity enters the goods for home consumption within the meaning of the Customs Act.

However, an importation is not a taxable importation to the extent that it is a non-taxable importation.

Under subsection 13-10(b) of the 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 of the xxxx xxxx that you import into Australia would have been GST-free /or input taxed had that supply been made in Australia.

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

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

Are the xxxx xxxx precious metal?

The term precious metal is defined in section 195-1 of the GST Act. 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

Goods and Services Tax Ruling GSTR 2003/10 (available at www.ato.gov.au) provides guidance on what is 'precious metal' for the purposes of the GST Act.

Paragraph 10 of GSTR 2003/10 explains that to be precious metal, a thing must be the metal gold, silver or platinum of specified fineness or a substance listed in the regulations. The gold, silver, platinum or other substance must also be in an investment form.

Currently, the regulations do not specify any form of metal that will be a precious metal under the GST legislation. Accordingly, to be precious metal for GST purposes, the metal must be gold, silver or platinum and must also be in an investment form.

Metal xxxx

To be the metal xxxx, the item must have the character of the metal rather than the character of a thing made from the metal.

A factor that can point to whether something has lost its character as the metal xxxx is, whether it is traded at a price that is determined by a reference to the prevailing spot price for the metal.

If something is not usually traded at a price determined by reference to the prevailing spot price of its metal content it is not being traded for its metal value only. For example, proof xxxxs are traded at a price that reflects the quality of the finish over and above what is necessary to trade the metal value.

From the facts given, the purchased xxxxs are made of the metal xxxx and the price of these xxxxs are determined solely on their metal content and is derived from the spot price of the xxxx. The xxxxs therefore have the character of metal xxxx.

Investment form

What is 'in an investment form' is not defined in the GST Act. It will therefore take its ordinary meaning. The expression is covered under paragraphs 14 to 28 of GSTR 2003/10.

Paragraph 29 of GSTR 2003/10 provides a summary of what is in an investment form and 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 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.

From the facts given, the xxxxs are in an investment form because:

•                    they are in tradeable form - the xxxxs (physical form) in which the metal is capable of being traded on the international bullion market for the metal xxxx;

•                    they bear the accepted mark or characteristic - the stamps on the xxxxs are accepted in the market as identifying its fineness and quality of the metal;

•                    the price is determined by the spot price - the xxxxs are traded by reference to the spot price for the time they are traded.

The xxxxs are therefore considered to be metal in the investment form. However, the definition of precious metal requires that the xxxx in investment form must be of a specified fineness.

Specified fineness

The definition of 'precious metal' requires that the xxxx (in an investment form) be of at least 99.5 per cent fineness.

The fineness of the xxxx in the xxxxs is XX.XX per cent. The definition of precious metal is therefore satisfied.

Summary:

The xxxx xxxx that you have imported are precious metals as defined in section 195-1 of the GST Act.

Are the xxxx xxxx GST-free or input taxed?

Relevant to the supply of the precious metals is 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 have advised that you are not a dealer in precious metals. Section 38-385 of the GST Act is therefore not applicable to you.

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 the supply being a supply of precious metal. Accordingly, the supply of the xxxx xxxx you have imported is an input taxed supply under section 40-100 of the GST Act as these xxxx xxxx are precious metals as defined in section 195-1 of the GST Act.

Your importation of the xxxx xxxx is a non-taxable importation under paragraph (b) of section 13-10 of the GST Act and you therefore will not be liable to pay GST on the importation.