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  • » Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

#26 2016-06-01 19:08:52

bordsilver
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Are you saying that people are assets w.r.t. taxes? Boy that escalated quickly. hmm


Anyone who lobbies a government in order to get the government to ban something is in my view an undesirable person. And I mean anyone. - Kris Sayce

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#27 2016-06-01 19:09:28

SpacePete
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Bullion Baron wrote:
bordsilver wrote:

If you don't get it I probably can't explain it to you. The government has no right to treat any asset class differently.

Asset classes should be treated differently because they are inherently different. For example a reason property may be treated differently to a stake in a company:

"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property." - Thomas Paine

If we go down your slippery slope then animals (which can be assets) should be treated no differently to people.

The phrase "people are our greatest asset" suddenly becomes a lot more ominous.

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#28 2016-06-01 19:11:13

SpacePete
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

bordsilver wrote:

Are you saying that people are assets w.r.t. taxes? Boy that escalated quickly. hmm

Now do you get the gist of my earlier comment? Who makes the actual definitions of what is and isn't an asset class?

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#29 2016-06-01 19:19:19

mmm....shiney!
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

SilverPete wrote:
bordsilver wrote:

Are you saying that people are assets w.r.t. taxes? Boy that escalated quickly. hmm

Now do you get the gist of my earlier comment? Who makes the actual definitions of what is and isn't an asset class?

Bullion Baron?


3<

"Every day is ordinary, until it isn't."

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#30 2016-06-01 19:33:28

Bullion Baron
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

goldpelican wrote:

The irony of this finding against SGB is that it makes even more items suitable for the existing alleged GST scams where input credits are improperly claimed, or GST is charged without remittance by "missing traders". A commonly held opinion in the industry was that the ATO was likely to prohibit claiming any input credits on scrap in order to curb the GST shenanigans that happen in the supply chain to a refiner of secondary market metals (e.g. scrap recycling). They've just hinted that they are instead broadening the supply of metal that is subject to abuse.

This seems to make a lot of sense, is there a reason this would cause (accounting/tax) problems when refining the metal? I presume it would just lower the price dealers and refiners are prepared to pay for incoming scrap...

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#31 2016-06-01 19:57:24

SpacePete
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

What is the likelihood that the ATO will simply do nothing WRT clarifying the regulations?

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#32 2016-06-01 20:25:02

Bullion Baron
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

SilverPete wrote:

What is the likelihood that the ATO will simply do nothing WRT clarifying the regulations?

Given how long it is taking the ATO to build a case on the GST fraud costing the country hundreds of millions I don't think that clarification will come about fast, perhaps not until they are challenged by one of the businesses whose products they decide to pick on...

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#33 2016-06-01 21:09:53

HoldMeTender
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

goldpelican wrote:
HoldMeTender wrote:

What happens afterwards in the secondary market should be completely irrelevant to the tax treatment at the time of initial sale.

Disagree - what happens afterwards in the secondary market should be completely driven by the tax treatment at the time of initial sale. If Perth Mint sells a bullion coin into the market GST-free as an input-taxed supply, then it should remain GST-free through it's entire downstream lifecycle. The ATO findings against SGB are that SGB should have determined items to be collectibles, and charged GST accordingly - despite them being sold from the mints and the wholesalers as GST-free items. Completely at odds with how GST is supposed to work. A dealer simply cannot subsequently decide "oh this particular Lunar coin is becoming collectible, I'll change it from an input-taxed to taxable supply" when the form of the coin has not changed. The tax status of precious metals can only change when the item changes form, i.e. during refining or fabrication.

Let's not forget that for years Perth Mint sold Kookaburra 1oz silver coins with a flat $10 AUD premium for many years after GST was introduced - even when spot was well under $10 AUD. All GST-free sales on an input-taxed basis, so the arguments about the size of the premium in relation to spot don't stack up based on industry-leader examples since day 1 of GST introduction. They were still sold relative to the spot price. There's never been guidance from the ATO in regards to "how much" premium over spot is acceptable.

We don't disagree smile What I was trying to say is if a coin may become collectible or sought after in the secondary market that shouldn't make the entire series a taxable, non-bullion product. If it's sold initially without GST then I agree it should remain GST-free unless changed (e.g. gilded or possibly slabbed?).

I also agree the size of the premium would be an arbitrary and imperfect measure of what is 'collectible' - but none of this seems to 'stack up' with how bullion products have been treated in the past. I'm sure the ATO will make its own decisions but it seems obvious things are going to change and we're passing the time brainstorming possible outcomes.. hopefully we are left with some bullion option other than featureless rounds stamped 999.

Let's hope we get a fair and clear result soon.


All that glitters is not gold...
...but all that is gold glitters!

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#34 2016-06-01 21:13:01

HoldMeTender
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

SilverPete wrote:

What is the likelihood that the ATO will simply do nothing WRT clarifying the regulations?

That would suck, but I wouldn't rule it out. Conceivably it could have to get hashed out in court..


All that glitters is not gold...
...but all that is gold glitters!

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#35 2016-06-01 21:19:25

Holdfast
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Bullion options???

All of Perth's bullioin products are designated as bullion coins and have been signed off as bullion IAW the Currency Determinations.

All of Perth's bullion coins are legal tender as stipulated in the "Determinations".

Example

Quote

EXPLANATORY STATEMENT
Issued by authority of the Parliamentary Secretary to the Treasurer

Currency Act 1965

Currency (Perth Mint) Determination 2015 (No.3)

Under subsection 13A(1) of the Currency Act 1965, the Parliamentary Secretary to the Treasurer has made a determination regarding the specifications of coins proposed to be issued by the Perth Mint (Gold Corporation).

Subsection 13A(1) of the Currency Act 1965 requires that the determination provide details of coin characteristics including standard composition, standard weight, allowable variation from standard weight, design and dimensions.

A determination made by the Parliamentary Secretary to the Treasurer is a disallowable instrument for the purposes of section 42 of the Legislative Instruments Act 2003.

https://www.legislation.gov.au/Details/ … ement/Text

Last edited by Holdfast (2016-06-01 21:20:08)

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#36 2016-06-01 21:29:34

Ipv6Ready
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Holdfast wrote:

Bullion options???

All of Perth's bullioin products are designated as bullion coins and have been signed off as bullion IAW the Currency Determinations.

All of Perth's bullion coins are legal tender as stipulated in the "Determinations".

Example

Quote

EXPLANATORY STATEMENT
Issued by authority of the Parliamentary Secretary to the Treasurer

Currency Act 1965

Currency (Perth Mint) Determination 2015 (No.3)

Under subsection 13A(1) of the Currency Act 1965, the Parliamentary Secretary to the Treasurer has made a determination regarding the specifications of coins proposed to be issued by the Perth Mint (Gold Corporation).

Subsection 13A(1) of the Currency Act 1965 requires that the determination provide details of coin characteristics including standard composition, standard weight, allowable variation from standard weight, design and dimensions.

A determination made by the Parliamentary Secretary to the Treasurer is a disallowable instrument for the purposes of section 42 of the Legislative Instruments Act 2003.

https://www.legislation.gov.au/Details/ … ement/Text

I thought Perth mint also made coins for others and is coins like Star Trek series legal tender


Looking for 40 pre1944 shilling details in the link
http://forums.silverstackers.com/topic- … -worn.html

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#37 2016-06-01 22:17:56

Holdfast
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Bullion coins

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#38 2016-06-02 04:31:09

bron.suchecki
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Tax isn't about what is logical or "right" but how far the ATO thinks it can push its interpretation so as to maximise tax revenue without instigating a court case, where there is a risk that a court could interpret "investment" broadly. For small business the ATO can be aggressive as it knows they don't the money to go to court, but the ATO has to be careful poking the big bear that is the Perth Mint, as they do have the money. However, the Perth Mint may not be interested in taking a more aggressive ATO to court considering that:

1. most of its metal is exported, I think they have said publically 90%, so we are talking about a small amount over their total profit being affected
2. GST applying to coins it currently doesn't will just push people to buy other non-GST coins, so maybe no loss of sales
3. Even if it has a net loss in sales, the ATO's interpretation will shut out imports of competitor product from non-LBMA manufacturers, and those buyers may switch to Perth Mint product
4. Even if it has a net loss in sales, it can easily just sell those coins (ie redeploy its production capacity) to overseas buyers, they would just increase allocations for overseas

End result is that the net loss of profit to Perth Mint may not be more than the expected court costs, so they do nothing. ABC/Pallion may be the one to take it to court as they are big enough to afford it and have a lot more (almost all?) of their revenue coming from the Australian market.

To be even more brutal, if the ATO can craft some BS argument based on who the seller is more than the product - that is if you aren't an international trader/LBMA or some such and thus only "retail" dealer, then GST is chargable on a lot more coins, vs LBMA accredited sellers - then ATO doesn't have to worry about Perth Mint and ABC being affected and taking it to court. Excuse the cynicism.

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#39 2016-06-02 20:46:40

iceblue
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

bron.suchecki wrote:

To be even more brutal, if the ATO can craft some BS argument based on who the seller is more than the product - that is if you aren't an international trader/LBMA or some such and thus only "retail" dealer, then GST is chargable on a lot more coins, vs LBMA accredited sellers - then ATO doesn't have to worry about Perth Mint and ABC being affected and taking it to court. Excuse the cynicism.

If this was to happen then the ATO would been seen as un-fair and un- reasonable by the rest of the industry, they cannot have two sets of rules selling into the retail market.
There will be no court battle, legislation will be changed and that will be the new normal.

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#40 2016-06-02 22:22:13

Big A.D.
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

bron.suchecki wrote:

End result is that the net loss of profit to Perth Mint may not be more than the expected court costs, so they do nothing. ABC/Pallion may be the one to take it to court as they are big enough to afford it and have a lot more (almost all?) of their revenue coming from the Australian market.

If the Perth Mint still considers itself an industry leader, standing by and watching half the industry be gutted and shut down by the ATO isn't how an industry leader behaves.

The industry's long-standing interpretation of the GST treatment has a logic to it: in the first instance there's the technical specifications test, then assuming the metal passes that it comes down to the pricing methodology. Fancy packaging and marketing-speak come a distant third. At the end of the day, you can take a super-collectible proof coin, smash it with a hammer and still be able to trade it for spot + whatever because the mangled lump of metal will still pass the first two tests.

Reversing the order of tests introduces all sorts of inconsistencies and puts the onus of figuring out the tax treatment on whichever marketing intern happens to be tasked with posting social media content this week. Taking that responsibility away from the engineers at a mint or refinery or the IT department that links up to the world's spot markets means that there is less focus on the (critical) consistency of production and trade, which is the entire point of asset markets: stuff of a particular standard exists and there is a market in which it can be traded.

If the die featuring a particular design wears out, does the mint have to commission an identical die lest changing the design makes previous production "limited"?

Does the ATO's flat-out factually incorrect statement about bullion coins not having year dates on them mean that technically acceptable coins now have to have GST applied (despite the fact that every coin ever produced anywhere has a year date on it)?

What exactly is a limited edition? The 500,000 1oz Kookaburras the Perth Mint makes a year? Low by international standards, so is the 47 million 1oz American Silver Eagle coins an appropriate definition of "limited"? Or is it to be determined by business turnover and there is a permissible ratio own-brand sales to total sales that any given dealer can use to work out how much business they're allowed to do?

And what if a particular product doesn't just doesn't sell and the producer discontinues it? Are they retrospectively liable for GST because they didn't make "enough" of a product that nobody wanted to buy in the first place?

How does the producer or retailer know how many people out there actually care about mintage figures? Does any given customer buy a particular product because they expect it to be made in limited quantities? And if so, isn't any secondary market for that product going to be pretty much limited to the other potentially small percentage of total buyers who also care about mintage limits and be completely ignored by everyone else who just buys stuff because of the intrinsic metal value? Does releasing mintage figures actually have an effect on enough people's purchasing habits? Or are they just a mildly interesting (or completely irrelevant) factoid related to a particular company's production output?

Is there going to be a required standard of ugliness for the ATO to consider something to be "precious metals"? Or can the mint say "Well, we have to stamp something on it so we may as well make it look a bit pretty"?


I'm really hoping all this is a case of some mandarin at the ATO telling an underling to "look into the bullion industry and go hard on anything that looks like it could be a bit iffy with the GST". Given how some rouge players have been exploiting the loophole for GST input credits on scrap, I can understand how they'd want to crack down on "bullion scams" and might throw an inexperienced assessor who has no experience with the industry into the deep end who has then grabbed the wrong end of the stick.

In fact, I'll be generous and say we shouldn't attribute to malice that which can be explained by ignorance (or stupidity) and the ATO hasn't properly though through the implications for the industry, or for themselves, given how many new questions now need to be raised.

That said, the Perth Mint (and ABC/Pallion) really need to step up to the plate here and nip this in the butt. Thinking that this won't ultimately affect them would be about as short-sighted as the ATO just deciding to re-interpret their own GST ruling.

It might not have a direct and immediate effect on them, but it's going to completely change the entire market for the worse and failing to act now will come back to bite them in the long run.


I am the Leafy Sea Dragon.

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#41 2016-06-03 19:32:21

iceblue
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

The problem here Big AD is the Perthmint or ABC/Pallion cannot do anything until it effects them directly, they cannot launch action with the Ruling against SGB. They cannot use what has been put against us to even start a conversation with the ato. What will happen is some dealers will get the same ruling as us. Then legislation will be changed - too late for a court battle.
The only way this could be fought would be for SGB to dispute the findings, which we wont do, we simply dont have the resources for a massive legal battle.

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#42 2016-06-04 07:14:36

alor
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Illusion gold, traded in the exchanges, those gold bought by India from the IMF for example. sure GST never apply.


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#43 2016-06-04 07:25:41

alor
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Perth Mint knows they have GST and Non-GST products,

what if they start to apply GST on their "new" products, such as re-mint the 1 oz poured bar, since they are hand stamp and each one is unique, just like products from Scottsdale.

they can be reclassified as collectibles and investments products. secondary market buy them back and melt they and made they become investment products again. wow


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#44 2016-06-04 07:29:28

Golden ChipMunk
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Read the OP X 10 times , out loud
You will find the result


Original Perth CAPSULES - All Sizes Available
Full/ Half SOVEREIGN caps, contact Chip wink

Please leave pm , I will reply back  wink Chip

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#45 2016-06-26 15:21:36

HoldMeTender
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Bump.. any news?


All that glitters is not gold...
...but all that is gold glitters!

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#46 2016-06-28 04:11:49

SpacePete
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

HoldMeTender wrote:

Bump.. any news?

Double bump.

Although maybe it may not be a safe topic to pursue too vigorously given the ATO's attacks against those who shine too harsh a light on goings-on in the department: http://www.canberratimes.com.au/nationa … pslz2.html

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#47 2016-06-28 05:40:21

Au-mageddon
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

"standing by and watching half the industry be gutted and shut down by the ATO isn't how an industry leader behaves."

... thats exactly how Coles and Woolworths treat any and all opposition


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#48 2016-06-28 07:48:14

Bullion Baron
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

Have been advised Perth Mint executive team is aware of the issue and is in ongoing talks with the ATO.

I wouldn't expect any fast answers. The GST fraud that is likely to have triggered these audits is still unresolved with few official comms after many years.

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#49 2016-06-28 21:04:44

iceblue
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

I doubt the perthmint is discussing our particular case with the ato, unless they found a legal way to bring up the issue without referring to our case, gov-gov so you never know.
Gov in caretaker mode, not much will happen until after the election, even then it will still take a while.
Another Bullion dealer got the same auditor as SGB so am watching that. See how that ends, actually come to think of it the perthmint may have started conversation with the ato with that case?! Dunno only speculating.

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#50 2016-06-29 00:04:00

Captain Kookaburra
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Re: Bullion Baron: Screw the Taxpayer - ATO Compels GST on Bullion

iceblue wrote:

Another Bullion dealer got the same auditor as SGB so am watching that. See how that ends, actually come to think of it the perthmint may have started conversation with the ato with that case?! Dunno only speculating.

It is true that there are a number of different auditors working with bullion dealers all over the country. It appears that they differ in their interpretation of the regulations, and what is/isn't investment or collectible metal.

It is my understanding that SGB (correct me if I'm wrong) never dealt with Perth Mint direct, and thus had no recourse to Perth Mint directly.

I do know of a number of businesses being audited that are direct distributors of Perth Mint product, and they would I believe be justified in asking some questions of their supplier.

Perth Mint are very supportive of their distributor network, and would be quite approachable for assistance.



I imagine - With tongue slightly in cheek, that it might go something like this:

ATO to Bullion Dealer: You should have charged GST for product X! You owe us Mega$$ in back GST.

Bullion Dealer to ATO: Perth Mint didn't charge me GST and they are a government organisation.

Bullion Dealer to Perth Mint: Hey, you didn't charge me GST? Should you?

Perth Mint to ATO: Ummm.. Guys ... Do you actually read the regulations?

ATO to Bullion Dealer: We won't admit we made a mistake, but we'll tell you that you don't owe us anything as long as you don't do it again.


Metal or Nothing ...... Fiats belong in garages, not money paper clips.

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