Edited version of private advice

Authorisation Number: 1051901959374

Date of advice: 13 October 2021

Ruling

Subject: GST and importation of silver bullions

Question

Is the importation of the Silver Bullions a non-taxable importation under paragraph 13-10(b) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. The importation of the Silver Bullions is not a non-taxable importation under paragraph 13-10(b) of the GST Act. The importation of the Silver Bullions is a taxable importation.

Relevant facts and circumstances

You purchased the Silver Bullions from outside Australia and imported them into Australia for resale.

You are registered for GST.

You provided a copy of commercial invoice from the overseas mint with the following information:

• Country of manufacture
• 99.9% Silver for investment purposes

•         Unit qty

•         Unit value

•         Commodity value

•         Total invoice value

You provided a copy of the Import Declaration lodged by the Customs broker with the following information:

• Valuation date

•         Description: 99.9 Silver for investment purposes

FOB $XXX

T & I XXX

CIF XXX

GST $XXX

You provided a copy of an email from the Customs broker saying that that shipment has been assessed and is subject to the following import charges calculated by Australian Border Force, which must be paid in order to have the shipment released for delivery:

Duty 0

GST $XXX

Customs Electronic Entry fee $XXX

Total $XXX

You provided a copy of your email to the Customs broker showing payment by card of the import charges.

You provided the link to the overseas mint's website showing the Silver Bullions you imported.

•         The Silver Bullions bear the mark of the overseas mint.

•         The Silver Bullion prices are based on Spot Price.

•         There is a surcharge for customers paying invoices using credit/debit cards and a processing fee for PayPal orders.

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

A New Tax System (Goods and Services Tax) Act 1999 Section 195-1

Reasons for decision

GST is payable on all taxable importation of goods into Australia.

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

•           goods are imported and

•           the entity enters the goods for home consumption within the meaning of the Customs Act 1901.

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

Section 195-1 provides that 'non-taxable importation' has the meaning given by section 13-10 and Division 42.

Section 13-10 provides that an importation is a non-taxable importation if:

(a)    it is a non-taxable importation under Part 3-2 of the GST Act or

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

Paragraph 13-10(a) of the GST Act

Part 3-2 contains subsection 42-5(1) which provides that an importation of goods is a non-taxable importation if the goods are covered by items in Schedule 4 to the Customs Tariff Act 1995.

As the Customs Tariff Act 1995 is administered by the Department of Home Affairs, we cannot determine if your importation of the Silver Bullions meets the requirements of paragraph 13-10(a) of the GST Act.

Accordingly, we will only determine whether the importation of the Silver Bullions meets the requirements of paragraph 13-10(b) to be a non-taxable importation.

Paragraph 13-10(b) of the GST Act

An importation is a non-taxable importation to the extent that, had it been a supply, the supply would have been a GST-free or input taxed supply.

Section 38-385 of the GST Act provides that a supply of precious metal is GST-free where it is the first supply of precious metal after refining by a 'refiner' and the recipient was a 'dealer in precious metal'.

Section 40-100 of the GST Act provides that where section 38-385 does not apply, then the supply of precious metal is input taxed.

The term '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.

Goods and Services Tax Ruling GSTR 2003/10 discusses what is a precious metal for the purposes of the GST Act.

Paragraph 10 of GSTR 2003/10 explains that to be a precious metal, a thing must be the metal gold, silver, or platinum of specified fineness, or a substance listed in the regulations. There is no other substance specified in the A New Tax System (Goods and Services Tax) Regulations 1999.

The gold, silver or platinum or other substance must also be in an investment form.

Specified fineness

The definition of 'precious metal' requires that silver (in an investment form) be of at least 99.9% fineness.

In your case, the Silver Bullions are 99.9% fineness. Therefore, they are precious metals if they are in investment form.

Investment form

The term 'investment form' is not defined in the GST Act. Paragraph 14 of GSTR 2003/10 provides that 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.

Paragraph 29 of GSTR 2003/10 summarises what is in an investment form for the purposes of the GST Act and states:

...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.

Tradeable form

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.

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 these metals.

Bears an accepted mark or characteristic

To be tradeable on the international bullion market, the metal must bear some mark or characteristic on its face accepted by the market as identifying and guaranteeing its fineness and quality. An example of a mark is a hallmark used on bars. An example of a characteristic is the characteristic pattern or design and noted weight and fineness found on a bullion coin that identifies the coin as issued, backed and guaranteed as to fineness by a government.

Paragraphs 24 and 30 of GSTR 2003/10 explain that hallmarks listed in the Industry Catalogue of Gold Bars Worldwide (ICGB) and hallmarks approved by the London Bullion Market Association (LBMA) are examples of internationally accepted hallmarks, which if carried are accepted on the international bullion market as to their guaranteed fineness and quality.

From the information provided, the Silver Bullions bear the mark of the overseas mint. While the overseas mint's website shows a number of affiliations, it is not an LBMA accredited refiner. In addition, the Silver Bullions do not bear a characteristic that identifies the coin as issued, backed and guaranteed as to fineness by a government. As such, we do not consider that the Silver Bullions bear a mark or characteristic that is accepted in the international bullion market as to the guaranteed fineness and quality of the silver.

Conclusion

As the Silver Bullions do not bear a mark or characteristic accepted as identifying and guaranteeing its fineness and quality, we do not consider the Silver Bullions to be in an investment form for GST purposes and therefore are not considered as precious metal for GST purposes. Therefore, the supply of the Silver Bullions would not have been GST-free nor input taxed if it were a supply.

As a result, the importation of the Silver Bullions is not a non-taxable importation under paragraph 13-10(b) of the GST Act.

The importation of the Silver Bullions is a taxable importation. Hence, GST is payable on the importation.