GST on coin sales

[JeffH]

There has been some discussion about GST in relation to coin sales in this thread Buyers Premium at auctions. Justified?

I thought it might be handy if we can summarise  and clarify the issue. Some time ago I discussed this with my cousin's husband (recently retired from the Australian Tax Office) and he advised me much as mentioned in various posts in the other thread.
The salient points (as I understand) are;
•There is no GST applicable to the face value of Australian legal tender. That is every Australian coin ever issued, except the Holey Dollar and Dump [which have been demonetarised].
•The paramount principle for application of GST, where items are traded, is that it applies to the difference in price between the previous transaction and the current transaction.
•Second hand goods, purchased privately by a person or business liable for GST, are not subject to GST but the purchaser can claim a GST rebate anyway, but only when the goods are sold.
•Specified items are exempt from GST but, sadly, not collectibles such as coins.

So, putting that all together, I have composed a "hypothetical";
•Goldseeker sells an upset (rotated) $1 coin to a dealer for $331. He is not in the coin trading business so is not liable to pay GST on the sale. (But he has a little more money for his world cruise.)
•The dealer marks it up and puts it on display in his window. Still no GST issue.
•Later, the dealer sells it for $441. He is now required to pay GST of $40. Subtract the coin face value and divide by 11.
 However, he can now claim a GST credit of $30, for the original purchase, by a similar calculation.
 So, when the dealer lodges his next Business Activity Statement, these transaction will increase his GST liability by a net $10.

How does that sound? Not clear? -then some discussion may be required. Wrong? -I am sure someone will point out my error(s).

The face value of the coin is not really relevant in this instance but I included it in the example anyway. Because, if Goldie was liable to pay GST then that will apply and he would have to pay $30 GST on his sale. The dealer can then obtain a tax invoice from Goldie and claim the GST even before selling on.

[markn]

•Second hand goods, purchased privately by a person or business liable for GST, are not subject to GST but the purchaser can claim a GST rebate anyway, but only when the goods are sold.

That's not quite true.  You can claim the GST immediately if the purchase price is under $300.  Over $300 you must wait until the item is sold.

[JeffH]

Thanks Mark. It is a long time since I checked that point and I have an aversion to reading ATO explanations so I didn't think to recheck the rules on that point.

[markn]

Thanks Mark. It is a long time since I checked that point and I have an aversion to reading ATO explanations so I didn't think to recheck the rules on that point.

PPH and I found the ATO ruling on it a while back.  I don't have the necessary partial frontal lobotomy in place today to want to look for it again.

[markn]

By the way there's a different set of rules with regards to trading of bullion.  Like it isn't complex enough already.

[Fulvio]

Like it isn't complex enough already.

Its like a spider web.. the more complex you can make it, the more you will catch out. Kind of the Baffle Them With BS mentality that so many companies (telcos for example) use when dealing with the sheeple.

[Unicorn]

I don't have the necessary partial frontal lobotomy in place today to want to look for it again.

:laugh2: ..... nor the bottle in front of me ....

[Bigfellani5]

I am afraid guys this all not quiet correct. The face value plus and intrinsic value is subject to gst if an intrinsic value is added. Once an intrinsic value is added then every time the item passes the hands of anyone liable for gst  then gst must be paid regardless of the sale price ( or whether an intrinsic value is added to that particular sale) ( how do they police that!). So in other words all collector coins attract gst on the full sale value inc face value. A circulation coin is gst free except when a value beyond face is added and the whole price inc face value is subject to gst.  If it is sold even at face value by another dealer gst is still applicable.


On second hand good an implied gst credit is available upon purchases up to $300 at time of purchase. If the item sells for less than the price paid an adjust must be made so that the gst claimable down not exceed gst collected on the sale. On items purchased over $300 the implied credit is available on sale.

Bullion ( as specified under the gst act) does not attract gst except when an intrinsic value is added.. ( if it is sold in a case the case and the bullion item attract gst or if you bullion 2012 dragon is sold above the current price of similar bullion items because of some sort of perceived collector value). Once that item attracts gst then at every sale there after gst applies on that item regardless of future sale prices or condition.

The other thing is speak to you tax professional before relying on anything here. Also publicizing incorrect tax advice in an offense so also be very careful on how you post thing as if it is incorrect and someone relies on it you can be nailed by the ato as well.

[Basil]

Yeah,good advice,lots of grey areas that people should be careful of.It was on TV & Radio again today,some Retailers Assoc. guy calling for the Govt. to Tax. "äll Internet sales".I think it will happen in one form or another and my Journo. Niece is convinced Ebay transactions are in the Govt's sights but time will tell.

[Fulvio]

some Retailers Assoc. guy calling for the Govt. to Tax. "äll Internet sales".

I'd love to hear exactly how this genius proposes to tax a foreign company with no local presence. eBay may be a prime target, but its one of a small bunch. Most are well and truly out of reach.

[Ozcoins]

some Retailers Assoc. guy calling for the Govt. to Tax. "äll Internet sales".

I'd love to hear exactly how this genius proposes to tax a foreign company with no local presence. eBay may be a prime target, but its one of a small bunch. Most are well and truly out of reach.

Tax is owed by whoever receives the package?

[Basil]

I haven't had the time to check but i think(been told) California has some sort of sales tax on Internet purchases.  


http://www.abc.net.au/worldtoday/content/2013/s3898176.htm

[JeffH]

What a can of worms it is to understand GST. I think we should get an expert in to explain it simply...The GST Interview.

[triplewitch]

I haven't had the time to check but i think(been told) California has some sort of sales tax on Internet purchases.  

California taxes in-state internet purchases and assesses a use-tax on out-of-state internet purchases intended for use in California.  In most cases the use-tax is to be self-reported and thus is widely ignored.  Illinois has a similar law.

[Fulvio]

Remember how the GST was supposed to both simplify and reduce taxes? HA!

Like pigs in a swill trough... y'just can't ever trust the bastards.