Private ruling: GST on the importation of precious metals
Date of advice: 7 June 2018
Published: August 2018
Date scheme commenced: You are not registered for GST.

Ruling: Q1: Are the Silver Bars considered as precious metals as defined in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes. | Q2: Is GST payable on the importation of the Silver Bars? | A2: No. | Q3: Are you entitled to claim the GST credit on the importation of the Silver Bars? | A3: No.

Relevant facts and circumstances: You are not registered for GST. You purchased Silver Bars from the website of an overseas precious metals dealer. You provided an email copy of your order history which lists the Silver Bars with their unit price and total for the order, including shipping and insurance. The bank transfer information lists the beneficiary as the overseas precious metals dealer. You advised that when the Silver Bar arrived in Australia, the courier company refused to deliver your package unless you paid the GST. You provided a copy of a tax invoice from the courier company which lists the GST paid to Customs. You provided a copy of the Customs Entry which lists the item as a number of Silver Bars and: Customs value a certain amount T & I a certain amount GST a certain amount You have advised that the Silver Bars are 99.9% fineness with the hallmark of an overseas Mint and contain serial numbers. The Silver Bars are traded by reference to the spot price at the time they are traded. You currently have an inventory of silver pieces which are held in a vault. Most of your silver items are purchased in Australia. You hold the silver pieces until such time that it is right to sell them.

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 15-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 15-10 | A New Tax System (Goods and Services Tax) Act 1999 Section 23-5 | 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 Division 188 | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1

Reasons for decision: Summary: The Silver Bars are precious metals for the purposes of the GST Act. | Detailed Reasoning - Detailed reasoning: 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 GST. 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. | Detailed Reasoning - Specified fineness: The definition of 'precious metal' requires that silver (in an investment form) be of at least 99.9% fineness. | Detailed Reasoning - 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 20 of GSTR 2003/10 further explains 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 bullions are the physical forms in which the metals gold, silver and platinum are traded on the international bullion market for these metals. Furthermore, 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, for example a hallmark. Also, the metal supplied in a tradeable form should be traded at a price that is determined by reference to the spot price of that metal to indicate that it is in an investment form. The spot price reflects the value of the metal content of the metal being traded. You advised that the Silver Bars are 99.9% fineness with the hallmark of an overseas Mint and contain serial numbers. The Silver Bars are traded by reference to the spot price at the time they are traded. Therefore, the Silver Bars are precious metals for the purposes of the GST Act. | Summary: GST is not payable on the importation of the Silver Bars. | Detailed Reasoning - Detailed reasoning: GST is payable on all taxable importation of goods into Australia. Section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (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 of the GST Act provides that ‘non-taxable importation’ has the meaning given by section 13-10 and Division 42. Section 13-10 of the GST Act 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. | Detailed Reasoning - Paragraph 13-10(a) of the GST Act: Part 3-2 of the GST Act 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 Bars meets the requirements of paragraph 13-10(a) of the GST Act. Accordingly, we will only determine whether the importation of the Silver Bars meets the requirements of paragraph 13-10(b) of the GST Act to be a non-taxable importation. | Detailed Reasoning - 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. You purchased the Silver Bars from a dealer of precious metals. As discussed in Question 1 above, the Silver Bars are precious metals for the purposes of the GST Act. Hence, if your importation of the Silver Bars had instead been supplies, the supply would have been input taxed under section 40-100 of the GST Act. Therefore, the importation of the Silver Bars is a non-taxable importation under paragraph 13-10(b) of the GST Act. Hence, GST is not payable on the importation of the Silver Bars. | Summary: You are not entitled to claim the GST credit on the importation of the Silver Bars . | Detailed Reasoning - Detailed reasoning: Under section 15-15 of the GST Act you are entitled to the input tax credit (GST credit) for any creditable importation that you make. Under section 15-5 of the GST Act you make a creditable importation if: (a) you import goods solely or party for a creditable purpose (b) the importation is a taxable importation and (c) you are registered or required to be registered for GST. Under subsection 15-10(1) of the GST Act you import goods for a creditable purpose to the extent that you import the goods in carrying on its enterprise. However, under subsection 15-10(2) of the GST Act, you do not import the goods for a creditable purpose to the extent that: (a) the importation relates to making supplies that would be input taxed; or (b) the importation is of a private or domestic nature. You advised that you purchased the Silver Bars for your enterprise and hold them for sale when the time is right. Your enterprise as defined in section 9-20 of the GST Act is investing as a trustee of a complying superannuation fund. However, as outlined in Questions 1 and 2 above, the Silver Bars are precious metals and their supply is input taxed. Consequently, although you imported the Silvers Bars in carrying on your enterprise, the importation relates to supplies that would be input taxed. Hence, you have not imported the Silver Bars for a creditable purpose and the requirement of paragraph 15-5(a) of the GST Act is not satisfied. Consequently, the requirements of section 15-5 of the GST Act are not satisfied and you have not made a creditable importation. Therefore, you are not entitled to the GST credit. | Detailed Reasoning - Additional information: As outlined above you cannot claim a GST credit on the importation of the Silver Bars. You may wish to contact the courier company providing copies of documents to prove that the items imported were precious metals and consider if they would amend the Customs entry.