TAXATION RULING NO. ST 2286

ST 2286

SALES TAX : BULLION; GOLD COINS AND GOLD PIECES

• Please note that the PDF version is the authorised consolidated version of this ruling and amending notices.
  This document has been Withdrawn.
  View the Withdrawal notice for this document.

FOI status:

May be releasedFOI number: I 1177038

PREAMBLE

Prior to 20 September 1985 item 109 in the First Schedule to the Sales Tax (Exemptions and Classifications) Act provided exemption for gold bullion, gold coin and gold recovered by crushing, washing, dollying or sweeping, where the bullion coin or gold is imported for treatment by the Royal Mint. The item was omitted with effect from 20 September 1985 and two new items - items 109 and 109A inserted in its place.

2. Item 109, First Schedule, exempts gold coin and gold imported for treatment by the Royal Australian Mint or any other mint approved by the Treasurer in writing for the purposes of the item. Item 109A, First Schedule, exempts bullion. The effect of item 109A is that all bullion, including compositions of Australian and overseas gold, is exempt from sales tax.

3. Item 2, Second Schedule, imposes tax of 30% on goods made wholly or principally of a precious metal or of two or more precious metals but not including coins or ingots, granulated gold, gold wire, gold leaf or similar materials of other precious metals, or goods covered by an item in the First Schedule.

4. Following the insertion of item 109A into the First Schedule advice has been sought on what the term "bullion" covers, particularly whether coins or gold pieces in the form of coins are "bullion".

5. The term "bullion" is not defined in the sales tax legislation. Ordinarily the term is used to refer to gold or silver in the lump or mass, unwrought or semi-manufactured gold or silver or gold or silver in the form of bars and ingots which are suitable for further processing. The Concise Oxford Dictionary defines "bullion" as "gold or silver before coining or manufacture".

6. The meaning of "bullion" was considered in Freed v. Director of Public Prosecutions (1969) 1 All ER 428. The court had to consider whether gold replicas of minted coins were gold coin or gold bullion within the meaning of the United Kingdom Exchange Control Act 1947. Parker CJ observed that gold bullion is in the nature of gold bars, big or small, of standard sizes, though not necessarily confined to that, but at the most it covered gold in the lump or in a form which has not been fashioned to make it resemble anything else, fashioned into jewellery, fashioned into medals, fashioned into any other shape other than a shape as in the case of a gold bar which is a convenient way of holding and handling the gold. He held that the gold pieces were not bullion but were manufactured gold articles.

RULING

7. The term "bullion" covers gold or silver in the lump or mass or in the form of bars or ingots which are suitable for further processing. Articles such as coins, medallions and gold pieces in the form of coins produced from the further processing of bullion are not considered to be bullion. Nor are small articles stamped from gold sheet and sometimes described as ingots because they are rectangular in shape. Coins, medallions, gold pieces in the form of coins and small stamped ingots do not qualify for exemption under item 109A, First Schedule.

8. Item 2, Second Schedule, does not cover coins or ingots. An ingot is a piece of metal obtained from a mould in a form suitable for storage. There are also goods on the market which are described as ingots, see paragraph 7, and which may be purchased as a form of investment or worn as a personal adornment. They are made by rolling gold or silver bars into sheets and stamping into small rectangular articles. They are produced in the form of half ounce and one ounce gold or silver bars and may be punched with a hole to enable them to be worn with a chain. The end products have a distinct identity from the gold or silver bars. They are not considered as ingots in terms of item 2, Second Schedule, and are taxable at 30%. Gold pieces produced in a form similar to coins and medallions made of precious metal are also covered by item 2, Second Schedule, and taxable at 30%.

9. Coins which are legal tender in Australia are not goods for sales tax purposes. They are not subject to sales tax.

10. Where foreign coins are bought and sold for their value as collectors' pieces or as objects of investment they are considered to be goods and subject to sales tax. Because coins are excluded from item 2, Second Schedule, foreign coins which are traded as goods are taxable at the general rate of 20%.

COMMISSIONER OF TAXATION
8 October 1986

References

ATO references:
NO 85/2487-4
BO Syd. 22/A/D6/170

Related Rulings/Determinations:

ST 2053

Subject References:
BULLION; GOLD COINS AND GOLD PIECES

Legislative References:
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) ACT; ITEMS 109
AND 109A, FIRST SCHEDULE;
ITEM 2, SECOND SCHEDULE