Australian Tax Office Declares War On Bullion
Commodities / Gold and Silver 2016 May 24, 2016 - 03:01 PM GMTBy: Paul_Behan
The Australian Tax Office has started aggressively auditing Australian bullion dealers. One smaller dealer who had their own range of bullion rounds manufactured has taken the drastic decision to close their business. In Australia, there has always been a goods and services tax (GST) on collectors coins eg: proof coins, but generic bullion coins and bars have not attracted the 10% GST.
Below is Part 11 and 12 of the act dealing with the GST on bullion:
11. To be the metal gold, silver or platinum, the item must have the character of the metal rather than the character of a thing made from the metal. Items such as jewellery that happen to be made of gold, silver or platinum are not gold, silver or platinum for the purposes of the definition of precious metal in the GST Act. They no longer have the character of the metal gold, silver or platinum. They have the character of jewellery made from gold, silver or platinum. They are therefore not precious metal for the purposes of the GST Act.
12. A factor that can point to whether something has lost its character as the metal gold, silver or platinum is whether it is traded at a price that is determined by 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. This suggests that it does not have the character of the relevant metal. It has another character. An example is proof coins. As noted at paragraph 38, proof coins are traded at a price that reflects the quality of the finish over and above what is necessary to trade the metal value. The price is not determined solely by the metal value of the coin. The price is determined by reference to the spot price and by reference to the quality of the physical characteristics of the coin.F1 The latter indicates that proof coins are not traded for the metal value only and therefore indicates that they do not have the character of the metal, but rather the character of manufactured articles, that is, coins made from the metal. This means that proof coins are not precious metal.
What seems to have changed is how the ATO is seeing “the character” of bullion coins, rounds and bars.
“Any coins, rounds or bars that are not traded for the metal value only and therefore indicates that they do not have the character of the metal, but rather the character of manufactured articles, that is, coins made from the metal. Therefore, they are not precious metal for GST purposes.
In contrast, bullion coins do not have the year of manufacture on them and are mass produced and freely available. Bullion coins are stamped to guarantee the fineness and the backing of the government as currency.
In summary whilst your coins are made of fine metals, this does not make them precious metal for GST purposes. The relevant test is not what the coin is called but whether it has the character of the metal. To be considered precious metal for GST purposes the coin must be no more than the form which facilitates the precious metal and it must be subject to fluctuating prices.”
This could have huge potential ramifications for large mints like The Perth Mint whose lunar series of coins don’t currently have any GST charged on them but are certainly collected for their “character” over and above the metal value in the coins.
Some of the bullion dealers I spoke to are nervous, and some are annoyed, with good reason.
Paul Behan
www.ozcopper.com
© 2016 Copyright Paul Behan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
