Private ruling: Precious metal
Date of advice: 7 June 2024
Published: 22 July 2024
Ruling period: Xx xx xxxx - xx xx xxxx

Ruling: Q1: 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)? | A1: No. Your importation of the gold and silver coins is a taxable importation under section 13-5 of the GST Act. | Q2: Is GST payable on your importation of the gold and silver coins? | A2: 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.

Relevant facts and circumstances: You purchased XXX investment grade bullion coins from an international precious metal dealer overseas. Your purchase consists of XXX gold coins with 99.99% gold purity, and XXX silver coins with 99.9% silver purity. 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 that in accordance with the Australian Taxation Office (ATO) 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. You do not have an Australian Business Number and you are not registered for GST; 2. You purchased gold and silver coins from overseas and imported them into Australia for home consumption; 3. You provided the tax invoice from the international precious metal dealer overseas detailing your purchase of gold and silver coins; 4. The coins meet the definition of precious metals as they are 99.99% pure gold, and 99.9% pure silver; 5. The coins are stamped with weight, metal type and purity; 6. The coins are for your own investment and are not for resale; 7. The coins were priced with reference to the spot price and fluctuate according to the movement of the spot price; 8. The coins are not proof or collector coins and are listed as bullion investment coins on the precious metal dealer's website; 9. To demonstrate that value of your coins changes according to the movement of the spot price, you provided an example of the value of a gold and silver coin as of xx xx xxxx, with their respective increase in price of 14.9% and 18.7% respectively; 10. Bullion precious metals sold by Australian mints are sold at a slight premium to the spot price and are not subject to GST because they conform to GSTR 2003/10 in that the prices are referenced to spot price. You provided an example of a 1oz gold coin and a 1oz silver coin (both produced in Australia), as of xx xx xxxx, with their respective premiums of 5.2% and 22.5%. Both coins were GST exempt. 11. You provided additional information on Item 3 - XXXXX 1 ounce (oz) Gold coin and the links to the coin producer's website and their distributor's website overseas. Your coin is listed under bullion section of the mint producer's website without any VAT/GST. You purchased the coin from an international precious metal dealer overseas at a lower price than the mint producer's price as the distributor buys in bulk for a better price. Prices are linked and fluctuate based on the spot price for bullion. You calculated the premium of 4.1%. 12. You provided some insights into the price of silver bullion coins as sold by bullion dealers within Australia, all without the GST in price. The prices vary based on the spot price. You used an example of XXXX 1 oz Silver Bullion XXXXX coin with a high mintage of XXX, and in your view, not a collector coin. At the time, the spot price for silver was $XX.XX. You compared prices of several deals in Australia and calculated the premium that ranged from 26% - 44%. The following are the gold and silver coins you imported, relevant market value of the coins and spot price for gold and silver (please note that table removed as it contained information that may enable the identification of the taxapayer).

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: Summary: 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'. | Detailed Reasoning - 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. For example, jewellery that is made of gold or silver no longer have the character of the gold or silver metal for the purposes of precious metal definition in the GST Act. Paragraphs 37 to 42 of GSTR 2003/10 provide an explanation on the coins and specifically, paragraph 38 outlines the following distinction between proof coins and bullion coins: Proof coins are primarily traded by coin dealers, and the minting of proof coins is limited. 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. | Detailed Reasoning - 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. It is evident that your imported gold and silver coins are capable of being traded on the international bullion market. You purchased the coins from an international precious metal dealer. Furthermore, your coins are minted by various mints including the Royal Mint of the United Kingdom, the United States Mint, and Banco De Mexico. Your coins bear a hallmark that is accepted as identifying and guaranteeing fineness and quality. The remaining question is whether these coins usually trade at a price determined by referencing to the spot price of the metal they contain. 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. To determine whether a coin is a proof coin or bullion coin for GST purposes, we need to look at the major factors, and whether the bullion coins are: Below is the analysis of this. | Detailed Reasoning - 2024 1oz XXXXX and XXXX Gold BU Coin: Product details: On 15 February 2024, the average spot price for gold was $3,070.29 per oz. On the same day, you purchased a 1 oz XXXXX and XXXX gold coin for $XXX, resulting in a 5.7% premium above the spot price. As of 28 May 2024, the average spot price of gold had risen to $XXX per oz, and the market value of your coin at the time was $XXX, resulting in a difference of 2.4%. While we acknowledge that a standard premium is added to the spot price of gold coins to account for profit and other costs, the purchase premium is significantly higher than the standard premium. The observed difference indicates additional value included in the price of your coin. For example, consider comparing a plain 1 oz XXXX Bar Gold costing $3,575.60 with a 1 oz XXXXXX Gold Coin priced at $3,625.00 as of 5 June 2024. The higher price of the XXXXXX coin reflects its added value due to unique design and finish features that are not present in the plain XXXX Cast Bar Gold. Although, your gold coin satisfies the fineness and quality requirements, it possesses other distinguishing characteristics. Your coin is crafted with the highest precision and attention to detail, giving it the finest quality coin. The high-quality finish contributes to its value, suggesting that the spot price is not the primary factor driving its price. Due to its limited mintage, the coin is not readily available in the market, making it a rare item. Its value varies according to the supply and demand for such items that are based on their novelty and rarity, in addition being influenced by fluctuations in the metal price. Therefore, the coin's value is not solely derived from the metal itself but from its unique characteristics as a coin made from the metal. For these reasons, we consider the XXXXX and XXXX gold coin as a proof coin or collector's item. | Detailed Reasoning - 2024 1oz XXXXX and XXXX Silver BU Coin: Product details: On 15 February, the average spot price for silver was $35.187 per oz. On the same day, you purchased a 1 oz XXXXX and XXXX silver coin for $XX, resulting in a difference of 33%. This premium is significantly higher than what is generally accepted. On 28 May 2024, the market value of the coin was $XXX when the spot price of silver was $48.245 per oz resulting in a difference of 12.4%. While the subsequent difference is lower than the initial purchase premium, it still reflects additional value. The price is influenced by both the silver content, and this added value. To illustrate this further, we compared prices of two items: a plain 1 oz XXXX Minted Silver Bar costing $XXX and a 1 oz Silver Coin XXXXX priced at $XXX as of 5 June 2024. The higher price of the XXXXX silver coin is attributed to its valuable characteristics, including the depiction of XXXXX, a quality finish and limited production run. Similarly, as with the 2024 XXXXX and XXXX gold coin, your silver coin has unique characteristics that influence its value beyond movements in the metal price. Your coin contains special features that make it a numismatic piece. The coin is professionally designed and crafted with the highest precision and attention to detail, giving it an exceptional quality finish that adds value beyond its precious metal content. Although the mintage is relatively high, their availability in world markets it is limited, making them highly sought-after coins. Due to its unique features and numismatic characteristics, the XXXXX and XXXX silver coin is classified as a proof or collector's coin. Since the coin is not in an investment form, it does not meet the definition of a precious metal for GST purposes. | Detailed Reasoning - 2024 1oz XXXXX and XXXXX - XXXXXX Gold BU Coin: Product details: On 15 February, the average spot price for gold was $3,070.29 per oz. On the same day you purchased a 1 oz XXXXX and XXXX gold coin for $XXX, resulting in a premium of 4.9%. On 28 May 2024, the average market value of your coin was $XXX and the spot price of gold was $XXX per oz, resulting in a difference of 2.6% above the spot price. The premium is one factor that indicates whether a coin has additional value, but it is not the determining factor whether a coin is a bullion or proof coin. Other elements must be considered to describe them in these categories. When examining the features of you coin, it exhibits many characteristics of a collector's item. Specifically, it is designed and crafted by a skilled coin designer, transforming it into a piece of art. The process of modifying a plain gold coin into art, adds value beyond its metal content, distinguishing it from a bullion coin. For example, comparing a plain 1 oz XXXXX Gold Bullion, 99.9% pure gold coin costing $XXX with a 1 oz XXXX Gold Coin priced at $XXX as of 31 May 2024, the price difference represents the added value of the XXXX Gold Coin's design. This means that the coin is traded not only for its metal content but also for its condition and beauty. Similarly, with the XXXXX and XXXX coin, the premium is due to the coin's additional features and characteristics such as high-quality finish and artistic craftsmanship that raise its value above the spot price of the metal. Therefore, it is viewed as a collector's item that is likely to appreciate more over time than its equivalent metal value. | Detailed Reasoning - 2023 1/2oz XXXXXX 0.999 Gold BU Coin: Product details: On 15 February, you purchased a ½ oz XXXXX gold coin for $1,723.28. At that time, the average spot price of gold was $1,535.15 for ½ oz. This resulted in a premium of 12.2% above the spot price. This premium is significantly higher than the generally acceptable premium for gold. On 28 May 2024, the average market value of your coin was $1,932.48 while the spot price for ½ oz gold was $1,774.57. The difference of 8.8% above the spot price indicates that factors beyond the spot price are driving the value of your coin. As previously discussed, examples such as plain ABC and XXXX gold bullions demonstrate that designed coins like the XXXXX hold higher prices due to their unique features, commemorative value, and limited mintage (only 1,000 in this case). Consequently, the XXXXX gold coin is not a merely a bullion as it holds additional value beyond its precious metal content. As a result, XXXX gold coin does not meet the definition of a precious metal for GST purposes and is classified as a proof or collector's coin. | Detailed Reasoning - 2024 1oz XXXX Anniversary 0.9999 Silver BU Coin: Product details: On 14 February 2024, you paid $50.03 for a 1 oz Tuvalu Pink Panther 60 th Anniversary silver coin, while the average price of silver was $35.187 per oz. The difference represents a premium of 42% above the spot price. As of 29 May 2024, the average market value of the coin was $60.79 when the spot price for silver was $48.245 per oz, resulting in a difference of 26% above the spot price. As discussed earlier, for all silver coins, there is a standard premium over the spot price built into the prices for non-numismatic and non-proof coins as a profit as well as to cover the supplier's other costs, with the spot price being the main factor driving these prices. However, in your case, the difference is significantly higher than the standard premium indicating that the spot price is not the main factor influencing the price. In the example of a plain 1 oz XXXX Silver Bar, we observed that its price is lower than that of a 1 oz Silver Coin XXXXX. The higher price of the Silver Coin XXXXX is attributed to its distinctive features and design. The XXXXX silver coin is distinguished by its iconic XXXXX design commemorating its XX anniversary. Its limited edition enhances its appeal among collectors, increasing its value beyond the intrinsic metal worth. Given these characteristics, the XXXXX silver coin is a proof or collector's item. | Detailed Reasoning - 2023 1oz XXXXX XX Years of Awesomeness.999 Silver BU Coin: Product details: On 14 February 2024, you paid $46.94 for a 1 oz XXXXXX XX Years of Awesomeness silver coin when the average spot price of silver was $35.187 per oz. The difference represents a premium of 33% and is significantly higher than the standard premium. On 29 May 2024, the average value of the coin was $56.23 and the spot price $47.515 resulting in a difference of 18.3%. Similar to the XXXX silver coin, the XXXXXX coin boasts distinctive features that classify it as a proof or collector's item rather than a bullion coin. The coin depicts the iconic XXXXX, commemorating XX years of awesomeness, and its limited edition contributes to its highly sought-after collector's item. Consequently, the coin's value extends beyond its metal content and is no longer trading solely for its metal content. We have seen this distinction when we compared a plain 1 oz XXXXX Silver Bar with a finely designed and crafted 1 oz XXXXX coin. Given its unique characteristics and additional value, we consider the XXXXX coin as a proof or collector's item. | Detailed Reasoning - 2023 1oz XXXXX 999 Silver BU: Product details: On 14 February 2024, you purchased a 1 oz XXXXX silver coin for $53.90 when the average price of silver was $35.187 per oz. The resulting premium of 53.18% is significantly higher than a standard premium. On 29 May 2024, the average market value of your coin was $66.40 and the price of silver was $47.515 resulting in a difference of 39.7%. The significantly higher premium of the coin indicates that the coin is not trading for its metal value only but rather it is determined by supply and demand, which in turn is influenced by the coin's characteristics such as novelty, popularity, and limited mintage. Coins with distinctive features, unique designs and limited mintage are trading at higher prices compared to plain bullions. This was demonstrated in the example of finely crafted XXXXXX coin that is trading at a higher price than a plain XXXX Silver Bar. Similarly, the XXXXX silver coin is trading at a higher price due to its unique characteristics and limited mintage. Due to these characteristics and additional value, the XXXXX is classified as a proof or collector's coin. | Detailed Reasoning - 2024 1oz XXXXX 999 Silver BU Coin: Product details: On 14 February 2024, you purchased a 1 oz XXXXX silver coin for $46.94 while the average spot price of silver was $35.187 per oz, resulting in a premium of 33.4%. The difference is significantly higher than the generally acceptable premium. On 29 May 2024, the market value of the coin was $58.14 while the average spot price of silver was $47.515, resulting in difference of 22.3%. The significant premium above the spot price for the silver coin indicates that it is not trading based solely on the spot price of silver. Its value is determined by supply and demand that are in turn influenced by the coin's characteristics such as novelty, rarity, and quality finish. The additional value of the XXXXX coin arises from its distinctive design featuring the historical XXXX and XXXX. Its limited mintage, make the coin more desirable and sought-after. Due to these characteristics and its unique design, the XXXXX silver coin is a proof or collector's coin. | Detailed Reasoning - 2024 1oz XXXXX 999 Silver BU Coin: Product details: On 14 February 2024, you purchased a 1 oz XXXX silver coin for $43.84 while the average spot price for silver was $35.187 per oz, resulting in a premium of 24.5%. On 29 May 2024, the market value of the coin was $54.42 while the average spot price of silver was $48.245 per oz, resulting in a difference of $12.7%. Similarly, as with other silver coins you acquired, the premiums are significantly higher above the spot price for silver. This is due to supply and demand factors influenced by coin's design, quality of finish, novelty, and rarity caused by limited mintage. For example, if we examine various 1 oz silver coins available on the KJC website, prices range from $54.72 for a 1 oz 2024 XXXXX Silver Bullion Coin to $111,95 for a 1 oz 2003 XXXXX Silver Bullion Coin - QEII as of 31 May 2024. The difference in prices reflect their additional value beyond the coin's metal content and vary according to their features and characteristics as well as the spot price of silver. The XXXX silver coin holds both numismatic and investment appeal. On the obverse, it features King Charles III while the reverse features XXXX, a symbol of wisdom. Its historical significance and intrinsic value contribute to its desirability. With its limited mintage, it is a highly sought-after addition to collection or investment portfolios. Due to these features, the coin is trading for its silver value as well as the added value attributed to these distinctive characteristics. As such, the XXXX silver coin is a proof or collector's item. | Detailed Reasoning - 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 suggests that their value exceeds the intrinsic worth of the gold and silver they physically contain, even after accounting for other costs incurred by merchants. While gold coins typically carry a lower standard premium percentage, silver coins tend to have a higher premium due to the lower value of silver relative to gold. Furthermore, upon examining the characteristics of each coin you acquired, we find that they hold additional value due to their features such as design, commemorative nature, high-quality finish, novelty and rarity. Consequently, their prices are largely influenced by these characteristicsrather than solely by the metal's value. We compared the prices of plain gold and silver bullions with uniquely designed and crafted gold and silver coins and find that the designed coins, with high quality finishes, hold additional value above their metal content. The value add are due to their unique characteristics, resulting in coins being traded not only for their metal content but also for their condition and beauty. The gold and silver coins you imported fall into the category of proof coins or collector coins, encapsulating both the spot price and the value of their distinctive physical attributes. Based on the above, we have concluded that your silver and gold coins are proof coins and purchased for collection purposes. The prices have a premium value above the metal spot price that are determined by supply and demand and influenced by the coins' condition, novelty and rarity. Although the gold and silver coins meet the fineness requirements, the aforementioned factors lead us to conclude that they are not in an investment form for GST purposes. Therefore, they do not meet the definition of precious metal, and any 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. Consequently, your importation of these coins into Australia is not considered a non-taxable importation under paragraph 13-10(b) of the GST Act. | Detailed Reasoning - Question 2: Is GST payable on your importation of the gold and silver coins? | Detailed Reasoning - 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. | Detailed Reasoning - 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.

Bullion coins are traded based on their metal content at the spot price with no additional value to the value of the metal. The stamping of bullion coins confirms their value in terms of metal content, guarantees their fineness, and indicates government backing as currency. Bullion coins are mass produced and readily available in world markets. They are commonly traded by banks, bullion dealers, commodity brokers and stock brokers; and | Proof coins or other numismatic/collectors' coins are traded on their numismatic, commemorative or rarity value in addition to the value of the metal. The price of proof coins is determined by both the spot price and the additional value arising from their physical characteristics. 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. | traded on the basis of their metal content or their numismatic, commemorative or rarity value; | mass produced and freely available in world markets; and | considered to be an alternative investment product to bullion bars and wafers. | 1 oz gold coin of 99.99% pure gold | The highly anticipated 2024 XXXXX and XXXX Coin introduced in a collaboration between The Royal Mint and the United States Mint | Through the partnership between the two renowned Chief Engravers, the coin features a reverse design of national symbols of XXXXX and XXXX making it a unique and numismatic masterpiece | Crafted with highest precision and attention to detail, the coin is struck in the finest quality bullion | With its limited mintage and exceptional design, the 2024 XXXXX and XXXX Coin is set to become a highly sought-after treasure among collectors and investors alike | 1 oz silver coin of 99.9% pure silver | Pure gold enchantment: Each coin contains one troy oz of 999.9 fine gold, preserving the timeless mystique of Morgan le Fay in the most precious metal | Royal Mint Excellence: Struck to The Royal Mint's bullion standard, this coin exemplifies British minting craftsmanship at its finest | David Lawrence's Artistry: The skilled hand of coin designer David Lawrence brings to life a captivating rendition of XXXXX, adding depth to her XXXX tale | Individual coins come in protective packaging | Obverse: Shows the national shield's sculptural relief design that is encompassed by the legend, "XXXXX" (United Mexican States) | Reverse: Features two well-known symbols of the XXXX people: The XXXX sculpture in the forefront and the XXXXXX, in the background | 1 oz pf 99.99 pure silver coin | Official licenced XXXX collectable item with the iconic XXXX logo celebrating the XX anniversary | Reverse side features the Ian Rank-Broadley effigy of Her Majesty Queen Elizabeth II, along with important details such as the weight, purity, monetary denomination, and the year-date, 2024 | Crafted by The Perth Mint | Limited mintage: 1,000 worldwide | A rare and highly sought-after piece for collectors and XXXX enthusiasts | 1 Troy oz of 99.9% pure silver. | The unique design was approved by the issuing authority of XXXXX without a year date. | Celebrates the 15 th anniversary of XXXXXX | Issued a face value of 2 Dollars backed by XXXXX | 1 oz of 99.9% pure silver | The seventh release of XXXXX series | Limited mintage: 30,000 worldwide | The 2 rd release in the series | Obverse: Depicts XXXX along with "XXXXX", the year and legal tender denomination | Reverse: Depicts two majestic XXXX, one lies down for a rest and the other one looks back and surrounded by foliage | Legal tender in XXXX, bears a face value of 1 Pound, backed by the government | Intricate design featuring XXXX, a symbol of wisdom | Obverse features His Majesty King Charles III | Protective packaging to preserve its pristine condition