Edited version of private advice

Authorisation Number: 1052361107146

Date of advice: 12 February 2025

Ruling

Subject: Precious metals

Question 1

Is the importation by xxxx (you) of the XX (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 1

No. The purchase of the Coins is not a non-taxable importation under paragraph 13-10(b) of the GST Act. They are a taxable importation under section 13-5 of the GST Act.

This ruling applies for the following period:

1 October 20XX to 30 June 20XX

The scheme commenced on:

1 October 20XX

Relevant facts and circumstances

You placed two separate orders to acquire coins from a dealer outside the indirect tax zone (Australia). The invoices relevant to each order has been provided showing the purchase price of each coin.

The international market prevailing spot price of silver on the first invoice date was $xxxx

The international market prevailing spot price of silver on the second invoice date was $xxxx.

The amount of both orders was in excess of $X.

The items were shipped through a courier service to Australia. The courier service required that you pay GST on all items in both orders before they would ship them to you.

The total GST amount paid on the first invoice was $xxxx.

The total GST amount paid on the second invoice was $xxxx.

All Coins you acquired are silver of X% fineness.

All Coins you acquired are silver coins minted by the State Government Mint in Australia.

All Coins you acquired are clearly marked as X% silver.

All Coins you acquired are Australian government legal tender silver coins with clearly marked face values.

Relevant legislative provisions

A New Tax System (Goods and Services Tax Act) 1999 section 9-5

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 13-15

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

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 the 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 a 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 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.

Section 40-100 of the GST Act provides that a supply of precious metal is input taxed.

For section 38-385 and section 40-100 of the GST Act to be applicable, the Coins imported must meet the definition of 'precious metal'. The term precious metal is defined in section 195-1 of the GST Act and 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...

While the Coins you 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.

While 'in an investment form' is not defined in the GST Act, the Commissioner has expressed his interpretation of the term in paragraph 14 and onwards in Goods and Services Tax Ruling GSTR 2003/10 Goods and services tax: what is 'precious metal' for the purpose of GSTR (GSTR 2003/10). In particular, paragraph 29 in GSTR 2003/10 provides a summary of what constitutes '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 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.

Paragraphs 37 to 42 of GSTR 2003/10 specifically refers to coins and the differences between bullion coins from proof or other numismatic or collectors' coins. Relevantly paragraphs 37 and 38 in GSTR 2003/10 states:

Coins

37. Gold, platinum or silver coins can be manufactured to two standards, namely proof and bullion quality. Proof coins are marketed as collectables, whilst bullion coins are for the trading market.

38. The major factors that differentiate bullion coins from proof or other numismatic or collectors' coins include the following:

a)             Bullion coins are traded on the basis of their metal content, whereas proof or other numismatic or collectors' coins are traded on the basis of their numismatic, commemorative or rarity value. The price of gold, silver or platinum bullion coins is determined by reference to the prevailing spot price of the gold, silver or platinum they contain. In the case of numismatic or other collectors' coins, their value varies in accordance with the supply and demand for these items based on their novelty and rarity, as well as being influenced by movements in the metal price. The price for individual numismatic coins is also influenced by the condition of the coin. The price for proof coins is determined in reference to the spot price and also the additional value arising from their physical characteristics; they are exact reproductions, without flaws. Whereas for bullion coins the stamping only establishes their worth in terms of their metal value - the stamping only guarantees their fineness and the backing of government as currency. For proof coins, the additional quality of the finish is not related to the fineness and quality of the metal, but adds a further value associated with the quality of the finish and condition;

b)             Bullion coins are mass produced and freely available. This enables them to be freely traded in world markets. In contrast, the minting of proof coins is limited; and

c)              Bullion coins are considered to be an alternative investment product to bullion bars and wafers. They are traded by many banks, bullion dealers, commodity brokers and stockbrokers. Proof coins and other numismatic or collectors' coins, on the other hand, are primarily traded by coin dealers.

Paragraph 42 of GSTR 2003/10 explains that there are coins, such as commemorative coins, that are marketed in the retail market as 'bullion' coins because they are made from bullion. Such coins are not bullion coins for the purposes of GSTR 2003/10. Whether a coin is a 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.

The Coins you imported are capable of being traded on the international market and are minted by the State Government Mint. As such, these coins bear a hallmark that is accepted as identifying and guaranteeing fineness and quality. However, we do not consider that your acquisition of the Coins is traded at a price that is determined by the spot price of the metal it contains. This is demonstrated by the fact that using the spot price for silver on the date of your invoices reflects a purchase price which is at an additional value to the Coins metal content.

We consider that your acquisition of the Coins was due to features such as design, commemorative nature, high-quality finish, novelty and rarity. On this basis, the Coins are not "in an investment form" and are not a precious metal for the purposes of the GST Act. Consequently, section 40-100 and 38-385 cannot apply and your importation of these coins into Australia is not considered a non-taxable importation under paragraph 13 10(b) of the GST Act. They are therefore a taxable importation under section 13-5 of the GST Act.