Edited version of private advice

Authorisation Number: 1052242343024

Date of advice: 3 May 2024

Ruling

Subject: GST - importation of precious metals

Question 1

Is your importation of the gold and silver coins 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. Your importation of the gold and silver coins is a taxable importation under section 13-5 of the GST Act.

Question 2

Is GST payable on your importation of the gold and silver coins?

Answer

Yes, GST is payable on your importation of the gold and silver coins because your importation is a taxable importation under section 13-5 of the GST Act.

This private ruling applies for the following period:

Xx xx xxxx - xx xx xxxx

Relevant facts and circumstances

You are not registered for goods and services tax (GST).

You purchased gold and silver coins from a precious metal dealer overseas. Your purchase consists of X x 1 oz of 99.99% pure gold coin and XX silver coins totalling 50 oz of 99.9% pure silver. Details of your gold and silver coins are listed in the table below.

You imported the gold and silver coins into Australia. The imported coins were assessed as collectable items and you paid the GST on the importation.

You contend in accordance with section 40-100 of the GST Act and paragraph 29 of the Goods and Services Tax Ruling 2003/10 - Goods and Services Tax: What is 'precious metal' for the purposes of GST? (GSTR 2003/10), these coins qualify as precious metals and consequently should be exempt from GST. In support of your argument, you have made the following submission:

1.    The coins meet the definition of precious metals and are therefore exempt from GST.

2.    The price for each coin is derived from the spot price of gold or silver, along with a manufacturing premium.

3.    The coins serve purely as investments in the form of gold or silver bullion, without any numismatic collector value.

4.    The purchase price for each coin is not predetermined but fluctuates based on the movement of underlying spot metal prices. These coins were acquired from the gold and silver bullion section on the dealer's website, where prices are not fixed in advance. There is a separate collectables section on the website that is dedicated to collectible coins, which does not apply to the coins in question.

5.    The price of the bullion coins is solely determined by the spot price of the metal, rather than factors such as novelty, rarity, condition, or beauty.

6.    All necessary markings denoting purity, weight, gold, and silver content are present on the coins. The gold coin is 99.99% of a fineness purity, and all the silver coins are 99.9% pure. This information is stamped on the back of each coin and specified in the title of each product on the invoice.

7.    The coins have been imported into Australia and GST paid for the shipment to be released.

In your application for the private ruling, you submitted the following supporting documents:

•         Purchase invoice that provides details of the supplier, coins, and purchase prices in a foreign currency.

•         Custom broker's tax invoice that outlines the customs import duty and GST charges.

•         Page extracts from the precious metal dealer's website that display pricing information as of a specified date and include images of each type of coin you acquired.

The following are the gold and silver coins you imported, the relevant market value of the coins and spot price for gold and silver (table removed as it contained information that may enable the identification of the taxpayer).

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 paragraph 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

Is your importation of the gold and silver coins 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. Your importation of the gold and silver coins is a taxable importation under section 13-5 of the GST Act.

Detailed reasoning

Non-taxable importation

Paragraph 13-10(b) of the GST Act provides that 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.

To establish whether your importation of gold and silver coins is a non-taxable importation, it is important to determine whether the supply of the coins that you imported into Australia would have been GST-free supply under section 38-385 or input taxed under section 40-100 of the GST Act had the supply been made in Australia.

Section 38-385 provides that:

A supply of precious metal is GST-free 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 metal is a refiner of precious metal; and

(c)   the recipient of the supply is a dealer in precious metal.

Note: Any other supply of precious metal is input taxed under section 40-100.

The fact that you are neither a refiner nor a supplier of precious metals, and that you imported gold and silver coins for your own personal investment, means that you do not satisfy the requirements mentioned above. Consequently, your importation of gold and silver coins does not qualify as a GST-free supply.

Section 40-100 of the GST Act provides that a supply of precious metal is input taxed. For section 40-100 of the GST Act to be applicable, the gold and silver coins imported must meet the definition of 'precious metal'.

Precious metal

Under section 195-1 of the GST Act, relevantly 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...

Paragraph 11 of the GSTR 2003/10 explains that the gold or silver must retain the character of the metal itself, rather than the character of an object made from the metal. This distinction is made between:

•         Bullion coins: these are traded based on their metal content at the spot price with no additional value to the value of the metal; and

•         Proof coins or other numismatic/collectors' coins: these are traded based on their numismatic, commemorative or rarity value as additional value to the value of the metal.

Paragraph 42 of the GSTR 2003/10 clarifies that whether a coin is precious metal does not depend on its label as a bullion coin, proof coin or numismatic coin. Instead, the determining factor is whether the coin has the inherent characteristics of gold, silver, or platinum, regardless of its name.

This will be determined by whether the coin is traded for its metal content or for other reasons. Consequently, the mere fact that the gold and silver coins imported were acquired under the 'gold and silver bullion' category and meet the relevant fineness criteria, does not in itself, meet the definition of precious metal.

While the gold and silver coins imported satisfy the minimum fineness requirements specified in the GST Act, they also need to be in an investment form to satisfy the precious metal definition.

Investment form

Paragraph 29 of GSTR 2003/10 provides a summary of what constitutes 'in an investment form' and states that:

... 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.

The concept of 'investment form' is further discussed in paragraphs 14 to 21 and 29 to 32 of GST ruling GSTR 2003/10.

The gold and silver coins imported are capable of being traded on the international bullion market. They are minted by the Royal Australian Mint, that is the Australia's national mint, and the Royal Mint that is the official mint of the United Kingdom. As such, these coins bear a hallmark that is accepted as identifying and guaranteeing fineness and quality.

To determine whether the gold and silver coins imported are in an investment form, we then need to determine whether these coins are usually traded at a price that is determined by reference to the spot price of the metal it contains (details of the gold and silver coins removed as it contained information that may enable the identification of the taxpayer).

Conclusion

In summary, the gold and silver coins you imported are trading at a significantly higher premium compared to the standard premium over the spot price for gold and silver bullion coins. This difference indicates that the gold and silver coins you imported are not being traded at a price solely determined by reference to the spot price of gold and silver. In fact, their value significantly exceeds the intrinsic worth of the silver and gold they physically contain, even after accounting for other costs incorporated by merchants. It is recognised that gold and silver coins typically carry a standard premium over the spot price to account for profit and cover supplier's other costs. While the percentage of the standard premium for gold tends to be lower, the standard premium percentage for silver is generally higher because the value of silver is significantly lower than gold.

Due to their limited edition, the imported coins are not freely available in the market. Additionally, these coins possess specific characteristics and hold commemorative value. Consequently, the prices are largely influenced by their 'rarity, condition and beauty' rather than by the value that is determined by the spot price of the metal. The gold and silver coins you imported encapsulate both the spot price and the value of their distinctive physical attributes, including the quality of their finish, placing them under the category of proof coins or collector coins.

While the gold and silver coins you imported indeed meet the fineness requirements, the aforementioned factors and characteristics lead us to conclude that the gold and silver coins you imported into Australia are not in the investment form for GST purposes.

As such, the gold and silver coins you imported do not meet the definition of precious metal. Therefore, a supply of these coins would not be an input taxed supply under section 40-100 of the GST Act if it had been a supply. As a result, your importation of the gold and silver coins into Australia is not a non-taxable importation under paragraph 13-10(b) of the GST Act.

Question 2

Is GST payable on your importation of the gold and silver coins?

Answer

Yes, GST is payable on your importation of the gold and silver coins because your importation is a taxable importation under section 13-5 of the GST Act.

Detailed reasoning

Taxable importation

Paragraph 13-5(1) of the GST Act provides that an entity makes a taxable importation if:

(a)  goods are imported; and

(b)  you enter the goods for home consumption (within the meaning of the Customs Act 1901).

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

Note: There is no registration requirement for taxable importations, and the importer need not be carrying on an enterprise.

Home consumption

Paragraphs 30 and 31 of the Goods and Services Tax Ruling GSTR 2003/15: importation of goods in Australia delve into the concept of goods being entered for home consumption within the meaning of the Customs Act 1901 (Customs Act). Accordingly, imported goods are considered entered for home consumption when an 'owner', as defined in the Customs Act, lodges an import declaration in their name. By doing so, the owner effectively enters the imported goods for home consumption and becomes liable to pay GST on that importation to the extent that the importation is a taxable importation.

An importation of specific metal is an importation of goods, thus an importation for home consumption. Consequently, the importation of specific metal into Australia will be a taxable importation, unless it is a non-taxable importation. As the importation of your gold and silver coins does not meet the requirements of a non-taxable importation as outlined in section 13-10 of the GST Act, these coins are taxable importation under section 13-5 of the GST Act and subject to GST.