Tax Office GST Win on Scrap Gold

Discussion in 'Gold' started by GoldenEye, Jul 5, 2019.

  1. GoldenEye

    GoldenEye Well-Known Member Silver Stacker

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    Last edited: Jul 5, 2019
  2. ozcopper

    ozcopper Administrator Staff Member

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  3. boneyard

    boneyard Well-Known Member Silver Stacker

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    The Australian Taxation Office has had a legal win in its running fight to reclaim tax credits allegedly wrongfully claimed through a GSTgold swindle that denied the federal treasury more than $1 billion.

    The alleged scams, permanently shut down through changes to GST laws in 2017, hinged on the differential treatment of gold bullion and scrap gold. No GST is paid on the sale of pure gold bullion, but the supply of scrap gold attracts the consumption tax, which can be later claimed back as an input credit.

    While the credit is legitimately claimed by gold buyers across the country on sales of scrap precious metals to refiners, fraudsters also cottoned on to a loophole, either breaking down bullion and circulating it through refiners and trading companies, or even inventing transactions to claim the input credit as cash, without ever remitting the GST supposedly paid to the ATO.

    The ATO cottoned on to ballooning claims in the industry — scrap gold sales were worth about $160 million in 2011 and up to $1.8bn in 2016 — and began denying GST credits to suspect transactions and operators.

    But despite that, estimates have put the total lost revenue at up to $1bn, and appeals against the ATO’s decision to withhold tax credit returns are still wending their way through the Administrative Appeals Tribunal.

    The tax office claimed another win with the appeals tribunal yesterday, after the tribunal rejected a claim by Melbourne gold buyer Very Important Business that it was entitled to input tax credits worth $55,153 over the acquisition of scrap gold worth $606,702, refined in the back blocks of Melbourne by a second business, 888 Refining Australasia, in 2015.

    While the amount is small, the tribunal’s decision makes clear the refiner is a significant target of the ATO’s investigations, noting that tax investigators began a major audit of 888 Refining’s GST claims in late 2015, and some of the 250 companies that sold it gold in previous years, denying the company refunds and effectively “sounding the death knell for the refinery business”.

    In response, 888 Refining leased its refinery to VIB, which claimed to have continued operating it, acquiring scrap gold from 888 Refining and claiming input credits.

    The complicated arrangement was quickly shut down by the ATO again, and yesterday the tribunal found there was no evidence VIB had actually acquired the refinery, or even actually bought gold in a number of transactions on which credits were claimed, suggesting that a number of “tax invoices” presented as evidence of the transactions could have been fabricated.

    “There is no doubt that documents which masquerade as tax invoices can be evidence: they are, at least potentially, evidence of fraud,” the decision by the tribunal said.

    ATO deputy commissioner Jeremy Geale told The Australian the sums involved were not large in this case, but said the win was significant in that it was the first against a gold refiner rather than gold dealers or scrap merchants.

    The ATO has won at least four similar appeals against its decisions to withhold input credit refunds over the past few years, but all have targeted gold traders rather than middlemen in the transaction.

    “Even though it’s for $55,000 in terms of this case, this refinery had previously had 250 clients at one stage,” Mr Geale said.An AAT decision from August last year ruled against Sydney company Mango Reef’s appeal over the withholding of input credit payments worth more than $620,000 on the basis that many, if not all, flowed from fictitious transactions. In that case, 888 Refining was also named as the refinery to which the scrap gold was allegedly sent for refining.
     
    Damon, Nino, kutylin and 4 others like this.
  4. ddevil

    ddevil Member Silver Stacker

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    Thanks for that.
     

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