GST on coin imports - Tax system flaw?

[seedyrom]

As someone who regularly imports coins from overseas, I am all too familiar with GST.
I have paid many thousands in GST and customs brokerage charges over the years.

In fact, it wasn't until a very capable UPS worker rang me a couple of years ago when I had some coins held for GST payment, that they said "are these coins pure silver? Because if they are, you can claim GST exemption ". Suddenly there was a world of paperwork open to,me, as I declared GST exemption (whilst still paying >$100 each time for the handling fees).

GST exemption exists for buying gold, silver and platinum (precious metals) for "investment purposes".
https://www.abf.gov.au/importing-exporting-and-manufacturing/importing/cost-of-importing-goods/gst-and-other-taxes

The following link gives a real simple breakdown of precious metals, and how some products made from precious metals (rings, jewellery or even proof and numismatic coins) have had manual services and processes applied, which have altered their state from the original base metal.
https://iknow.cch.com.au/document/atagUio512339sl15715201/gstr-2003-10-gst-what-is-precious-metal-for-the-purposes-of-gst
Therefore (for example) a 1883 US Morgan dollar costing $20,000 would be subject to GST as its silver content is 90%.


Now, why aren't I happy with that?
Well, if a coin doesn't meet the definition defined in sections 38-385 and 40-100 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
 Namely:

• (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.''

we need to pay GST and I think that is wrong.
Ebay even automatically applies a GST component to overseas listings on coins, regardless of their fineness.

If I am buying a coin with a face value of USD $1, then I am performing a foreign currency exchange. If I am paying AUD $20,000 for USD $1, then that wouldn't be considered a good deal ... but that is up to me to determine what FOREX spot price I am willing to accept.

Long story short ... is the tax system broken? Should I be able to import coins without GST from overseas which have a face value and therefore are effectively fiat money.

[Basilstate]

Long story short ... is the tax system broken? Should I be able to import coins without GST from overseas which have a face value and therefore are effectively fiat money.

Yes,the 'Harvey Norman' Tax on importing Coins is ridiculous.I don't purchase much O/S Coins any more as the Oz $ is just too low but i would like the option to do so.

On that subject the UK market on Oz. pre-dec is certainly hot,i don't know who is buying them but sellers are asking, and getting, ridiculous prices on many key dates.

[nealeffendi]

It is nuts that we pay GST on pre decimal coins we buy from overseas. I have scores of coins purchased on  US and UK eBay and they add this fee. They were all struck pre GST and mostly in Australia. Do you get GST added to your purchase when you buy the same pre decimal in Australia?
Frankly it would be like going to the bank and withdrawing  a grand and the teller saying you need to pay a hundred in GST.

[gweidion]

GST exemption exists for buying gold, silver and platinum (precious metals) for "investment purposes".
https://www.abf.gov.au/importing-exporting-and-manufacturing/importing/cost-of-importing-goods/gst-and-other-taxes

Just be aware that although a coin may fit in the definition of a financial asset that the tax man has a loophole he can play.
If, for example, you were to purchase a 1oz Canadian Maple (gold or silver) that is greater than 99.5% or 99.9% respectively but you paid more than the financial asset price, the tax man can argue that you bought it as a collectors item, not a financial asset and charge you GST AND a penalty for failing to declare it correctly in the first place.
Similarly proof coins are created for collectors so unless you purchase a proof coin for less than the financial asset value the tax man will argue it is not a financial asset. Good luck finding an ounce of gold, silver or platinum proof at less than the financial asset price.
There reasoning being, if you just want an ounce of gold or silver why aren't you buying the cheapest available, ie bars or rounds.

[nealeffendi]

@gweidion, many stackers buy maples, eagles etc because they have more trust that they can spot a genuine coin compared to a generic round. Too many fake bullion pieces out there like Pamp.
Also being legal tender and a current mint product there is a better chance that the authorities will expend more effort on those fakes and their creators.
Also when it comes time to sell it will be easier to find a buyer for a reliable mint coin compared to an uncertain private issue round.
The cynic in me says that it wasn't just Gerry Harvey who pushed for the rules but the Perth Mint. They can sell here their Roos and Koalas etc and have an advantage over the imports.

[gweidion]

Indeed but you may have to argue that in court and the tax man has deep pockets.