Goto your account
Search Stories by: 
and/or
 

News

Articles from PRECIOUS METAL SERVICES (25 Articles), REFINING SERVICES (7 Articles)












The reverse GST charge requires businesses buying gold, platinum and silver to pay the 10 per cent tax
The reverse GST charge requires businesses buying gold, platinum and silver to pay the 10 per cent tax

New precious metal laws combat gold GST fraud

The Federal Government has introduced new goods and services tax (GST) law for precious metals in response to alleged fraud taking place in the gold trading industry.

Among the amendments, which came into effect 1 April 2017, is a reverse GST charge that changes the responsibility of GST payments to the government. The amendment requires businesses buying gold, platinum and silver to pay the 10 per cent tax. Until now, GST was remitted to businesses selling the metal.

The move was said to provide a level playing field and follows an ongoing Australian Taxation Office (ATO) investigation into the suspected fraudulent activity within the gold bullion and precious metals industries.

In announcing the investigation in October 2013, an ATO statement alleged that individuals and/or businesses were fraudulently claiming GST credits and also failing to report and pay the tax correctly. The issue arose because GST was not charged or paid on gold purchased for refining.

Those involved were reportedly refining GST-free gold bullion, which made it eligible for GST once sold. The new buyer would pay the tax to the seller and the seller would pocket the amount by not declaring it to the ATO.

Chris Jordan, Commissioner of Taxation
Chris Jordan, Commissioner of Taxation

The ATO alleged that syndicates were formed to conceal the nature of the activities, which in 2013 were reported to have totalled more than $65 million in lost tax revenue. An article published in The Australian earlier this month suggested this figure had increased to more than $700 million. 

In October 2013, the ATO, Australian Federal Police and Australian Crime Commission executed search warrants on premises associated with the companies operating in the gold bullion and precious metals industries.

No charges have been laid and the matter is made more complex because of the ‘loopholes’ in the law, as highlighted in an article published by The Sydney Morning Herald (SMH).

The SMH article reported that when asked why alleged participants had not been charged with fraud during a Senate committee hearing in 2015, Commissioner of Taxation Chris Jordan replied: “If it was fraud we would have taken action with the Australian Federal Police. What they [gold traders] would be arguing, though, is they would be asserting they were doing what the law allows.”

Minister for Revenue and Financial Services Kelly O’Dwyer said the changes would target the criminal activity and help to prevent similar occurrences involving other metals.

“To make sure this activity does not simply shift from gold to other precious metals, these changes will apply to all metals which are prescribed as precious metals, including silver and platinum, to stop this occurring,” O’Dwyer stated.

More amendments

In addition to the reverse GST charge, the definition of ‘second-hand goods’ was amended to exclude products containing gold, silver or platinum.

According to the ATO website, this change has been made to ensure that gold, silver or platinum bars that are “merely scratching or slightly defacing” did not fall within the definition of second-hand goods and thus were not entitled to an input tax credit.

Kelly O’Dwyer, Minister for Revenue and Financial Services
Kelly O’Dwyer, Minister for Revenue and Financial Services

Collectibles and antiques bought and sold as such may still qualify as second-hand goods, provided they met a threshold test.

The ATO website also highlighted that the reverse GST charge did not apply where the value of the goods exceeded the value of the precious metal component by more than 10 per cent. As such, the charge would typically only apply to jewellery undergoing a refining process and not finished jewellery sold by suppliers or retailers.

Businesses selling gold, silver or platinum would need to clearly state that the sale was a reverse-charged sale on the tax invoice. This also applies for buyers using recipient-created tax invoices.

A media release by O’Dwyer, dated 31 March 2017, stated that the changes would be legislated “as soon as possible”.

“Once the legislation is passed by parliament, the changes will apply retrospectively after the date of this announcement to ensure those who are engaging in this tax evasion activity do not get more opportunities to do so,” it read.

Defining precious metal

Under Australian GST law, a precious metal exempt from GST is defined as either:

  • gold (in an investment form) of at least 99.5 per cent fineness
  • silver (in an investment form) of at least 99.9 per cent fineness
  • platinum (in an investment form) of at least 99 per cent fineness
  • any other substance (in an investment form) specified in the regulations of a particular fineness specified in the regulations.

Examples of precious metals taxable sales subject to a reverse charge include:

  • goods that consist of gold, silver or platinum that are less than the fineness percentages mentioned above
  • gold dore
  • gold granules
  • gold bars that are not in an investment form.

For more information, visit the ATO website.




















Wednesday, 18 October, 2017 06:00am
login to my account
Username: Password:
standard_0317
advertisement
standard_0317
advertisement
(c) 2017 Gunnamatta Media