April 18, 2024
ABC Refinery ATO

ABC Refinery on Tax Considerations for Investors

For most people thinking of investing in precious metals, there’s more than the spot price to consider. This article looks at some of the reasons people choose to invest in them, why it might be worth considering ABC Bullion – exclusively refined in Australia at ABC Refinery – as well as broad Australian Tax Office (ATO) considerations when buying or selling.

Three reasons people might choose to invest in precious metals

Whether as part of a Self-Managed Super Fund (SMSF), or kept safely at-hand for immediate access, ABC Bullion have found investors commonly cite these reasons:

As a form of insurance

Whenever there is increasing uncertainty or volatility surrounding the economy or geopolitical landscape, investors gravitate towards physical gold and silver as a form of insurance against what they see as uncertain times ahead.

Long-term returns

Gold prices have risen more than any other mainstream asset class since the turn of the century, leading more investors to put money into gold and silver.

Ongoing demand maintaining prices and relevance

The supply of precious metals is limited. However global demand by central banks (including the Reserve Bank of Australia), and growing numbers of individuals in China and India means that gold is seen as a commodity that will remain relevant and valuable.

Why ABC Refinery is considered a world-leading bullion producer

ABC Bullion gold and silver bars are some of the most tradeable precious metal commodities in the world. A large part of this is due to ABC Refinery being their exclusive supplier.

ABC Refinery reliably produces bullion to the most stringent international trading standards, with their gold produced to 999.9 purity, and silver to 999.5. It is one of the most highly accredited precious metals refiners globally, and Australia’s only independent refiner with London Bullion Market Association (LBMA), Shanghai Gold Exchange (SGA) and CME Group accreditation.

ABC Refinery ATO

General Australian Tax Office (ATO) considerations for bullion

This is a general overview on the ATO rulings for buying and selling physical bullion bars. Rulings for coins depend on the type of coins, and thus outside the scope of a general article.

In any instance, individuals should speak their tax adviser for specific advice relating to their own situation.

How does the ATO define bullion?

Summarizing the ATO Goods and Services Tax (GST) Ruling 2003/10, for a precious metal to be considered bullion it:

  • Can be traded on the international bullion market, either as a bar, wafer or coin
  • Bears a mark accepted as identifying its fineness and quality
  • Is usually traded at a price that references the spot price of its component metal

Goods and Services Tax (GST)

The ATO rules that gold and silver bullion is GST-free when being bought or sold. This applies whether someone buys or sells a 1-gram bullion minted tablet, or a 400oz bullion gold bar.

Tax fraud relating to GST

Because bullion is not subject to GST, it has in the past been the subject of GST fraud.

Criminals would buy GST-free gold bullion, refashioning it to scrap and then resell it – with GST now added. They would falsely stating the GST-free bullion they originally purchased was in fact purchased inclusive of GST, to claim GST input tax credits.

This kind of fraudulent activity has now become a focus for the Serious Financial Crime Taskforce (SFCT), and heavy penalties apply to anyone convicted of tax fraud.

Capital Gains Tax

When it comes to selling bullion, the general ATO ruling is that any profit made is subject to a Capital Gains Tax (CGT) of up to 28%.

However, if the bullion has been held by the seller for more than 12 months, that CGT is only charged on 50% of the profit made.

Records you should keep for the ATO

It’s important to keep records of every transaction relating to bullion from the moment of purchase, to 5 years after selling it.

These records should include the purchase date and amount or value, any sale date and price if the metals are sold, and other costs incurred in the purchase, storage and sale (if applicable) of the bullion.

Want to know more?

To find out more about investing in bullion, visit abcbullion.com and for more about the taxation implications for your investments, consult the ATO website or your tax advisor.