Capital Gains Tax accounting for precious metals

[dccpa]

I am curious as to what "generates" means? Does the ATO count income on a mark-to-market basis or when assets are sold. If $55k of gain on asset sales was the main criteria, you would be limited in what you could sell each year, but that wouldn't be a problem for most members.

 

[jnkmbx]

*thinks "silver doesn't grow on trees"* :/

It's not just CGT that's a bull breaker. The harder we work the more we get taxed.

 

[mikedm]

This thread might answer a few questions

http://forums.silverstackers.com/viewtopic.php?pid=36971

 

[bsides]

there is a lot of misinformation here. i'd suggest seeking paid advice from your accountants.

 

[Maximus]

I dont have any silver. Every time I try to buy some I get ripped off and lose my money. So all of those bank transfers and withdrawals are just lost income. But since I am slow on the uptake I keep doing it....

Can't tax stupidity... well actually you can

 

[bron suchecki]

1) There was an ATO ruling (thanks Boston) that indicates that a Citizen purchased gold as an inflationary hedge, i.e as something thats does not 'change in real value, only nominal value'. This is probably EXACTLY why most people buy PM's. To get off the inflation-go-round. This is a VERY nice case to break the ground for us.

Inflation protection is why you buy any asset. Inflation gains on other assets are taxed, I don't see why precious metals would be special in this case.

2) Under section 115 (If I recall) Gold and Silver can be used to pay taxes. Only Legal tender can be used to pay tax, hence Gold and Silver are legal Tender. Following this line of logic, changing one legal tender for another does NOT attract CGT events any more than swapping a hundred dollar bill for two fifties would.

Don't need s115 to say gold and silver are legal tender - the coins the Perth Mint mint are explicitly legal tender, issued under the Currency Act 1965. Problem is that the legal tender value of a coin is far below its market value. I'm sure there is some carve out that says CGT applies if coin/note's value goes over its legal tender value, otherwise numismatic profits on coins and note would be completely tax free.

2a) Since you cannot pay taxes on swapping legal tender for legal tender, GST would also not be applicable. This can be seen in the distinct lack of GST on all +.999 products (There is legislation in fact that specifies what classifies the purity required to avoid taxes, presumably it would be logical to extend this as the 'Purity of legal tender'

GST law is separate from tax law and is not based on whether the coin is legal tenders. Perth Mint lost an argument with ATO that our numismatic coins were identical to bullion versions, legal tender etc and so should not have GST on them just like bullion.

 

[RhythmDoctor]

Can't tax stupidity... well actually you can

It happens daily across the planet. It's called a Lottery.

 

[PrettyPrettyShinyShiny]

1. Ex-Wife - what silver are you talking about?
2. Bankruptcy trustee - no silver here, move along
3. ATO - silver? whats that?
4. Creditors - silverrr.... that means 25 years of marriage doesnt it?
5. Centrelink assets test - aint got none of that
6. Want a civil case - can't take what i dont have.

Dont get many investments that are so protected from others as precious metals that also have potential for growth overtime. Property, shares, bonds etc can all be "got" by those listed above.

.just another reason to add to the list why cash and other assets at the moment should be swapped for silver.

 

[grinners]

Unless a hobby generates over 55 (or 75?) k no need to declare, looking at the spikes people probably have made that

labor will just end up spending it on buildings for asylum seekers to burn down, sorry to go off on a tangent but im bloody sick of these people who brake the law, get treated with luxuries such as xbox's for personal use, and then say oh we are innocent we have done nothing wrong. bull*%#*- they are breaking our immigration laws.

Let me ask all those people who advocate for them to be let straight into our community- do you think Japan or China would let us migrate? We can't even buy property over there- yet we are such idiots. House prices are a joke here as we let foreigners buy into all our assets

You name it we dont own it, with labor in govt. all our assets will eventually be owned by foreigners and private companies...we are just starting to see the effects of Keneally's great move on electricity

Send them back from where they came from and let them do it the right way I say, teach them a real lesson without costing us fortunes. Give our kids a real chance.

At uni the other day in economics our lecturer brought up a slide which showed Aus' expenditure- let's just say everyone was flabbergusted by the amount allocated to welfare payments. These foreigners get on the boat, come over here, get on the dole straight away, and hey we have to pay for these blokes to get a free ride - just look to England to see our future.

YEAH!

Who the f*ck do they think they are fleeing war-torn countries that we start wars in!

And no, asylum seekers arn't breaking the law:

1. According to the 1951 Convention Relating to the Status of Refugees, a refugee is a person who "owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership in a particular social group, or political opinion, is outside the country of his nationality, and is unable to or, owing to such fear, is unwilling to avail himself of the protection of that country."

2. Under the United Nations (UN) 1951 Geneva Convention on Refugees, an agreement signed and ratified by Australia, we have a legal obligation to provide asylum to genuine refugees.

3. Australia's policy of mandatory detention for asylum seekers directly contravenes our commitment to the Universal Declaration of Human Rights (UDHR), which states "(e)veryone has the right to seek and to enjoy in other countries asylum from persecution" (Article 14, UDHR).

4. Seeking asylum in a country other than one's own is not illegal, nor is it 'queue jumping', but rather a fundamental human right of any person experiencing persecution in their country of origin.

But I'm sure that won't mean anything to you, as long as you have your VB, your southern cross tattoo and a 'f*ck off we're full' sticker on your ute you'll be right, mate.

 

[Big A.D.]

Unless a hobby generates over 55 (or 75?) k no need to declare

Wow, that's a loose definition of a hobby. There's no official cutoff, it depends on whether it's considered "carrying on a business". Grandma sewing quilts and pulling $55k a year isn't a sewing hobby.

I know a retired jeweller who only designs and fabricates a small number of very intricate, high value pieces a year. It keeps him busy. The last one he sold went for ~$38k so he could easily do $100k per year just as a hobby.

 

[Jing]

Hi guys,

Just wondering what sort of system/documentation you guys use to keep track of your metal purchases and sales? Especialy if one has been buying through private sellers, how can one legitimise the declared cost o purchase, should the ato be curious?

I've only been stacking for 4 months or so, so I've been meaning to ask this Q for a while. Thanks in advance.

Hey all,

Sorry to bring up an old thread, but just wondering if anyone has declared CGT on metals and how they have kept a record on purchase / sales that would be satisfactory for the ATO?
I know sometimes there are boating accidents but just wondering to avoid questions down the track - how to go about it properly?

would a spreadsheet of purchased cost / sold item price be sufficient?

 

[Phiber]

Would be a good idea to keep all receipts and invoices.

 

[Chillidog]

Just a numpty question.
If you bought you stack at the highs of the last two years. Ie $45/50 per oz for silver. So let's say a price average of $42.00 and sell it today at $32 per oz can you clam the $10.00 per oz as a CGT loss?

 

[Macros_The_Black]

If you bought you stack at the highs of the last two years. Ie $45/50 per oz for silver. So let's say a price average of $42.00 and sell it today at $32 per oz can you clam the $10.00 per oz as a CGT loss?

Best speak with an accountant for confirmation, but you should be able to claim the loss against another capital gain (in the same FY) or carry the loss forward.

^^ Seconded, shouldn't really be an issue if you have receipts. Remember the 50% CGT discount only applies if held personally and for more than one year and that if you then immediately buy back the same asset, it is regarded as "washing assets purely for tax reasons" and isn't allowed. I'd be confident an accountant would say if you sold bars, claimed a loss, then bought back in with coins, this would be 100% OK. So avoid exact-like-for-like/identical in other words.

But as BB says, best ask a decent accountant.

 

[Jing]

what if we have been purchasing off private buyers here on ss, with no receipts? or going to ss meetups and buying at auctions?

 

[Macros_The_Black]

Good question. Personally, I believe if you wish to play the game of above-the-board-accounting and claiming legit capital losses then it is smart (and easier) to have receipts. I also keep screenshots of PMs, with the date.

There are those (not Silver Stackers!) who would fly under the radar and not declare gains, perhaps understandable in the black economy, in which case it's hard to eat your cake and have it too and claim losses with no evidence.

Nobody here does that of course!

 

[Byron]

I think the greatest problem for some (not Silverstackers) might be when selling large amounts.

Most dealers would pay by cheque or eft. Hard to hide that.

 

[SliderC]

I would hazard a guess that most stackers here are in long. They are holding for the future, a hedge against inflation.

If you are buying silver as a potentially life changing investment/saving you need to be in pretty deep. In the long, at least 20kgs.

So if you are buying for the long, how are you planning on selling one day? Cash in the street? face to face? what if silver is $100 an ounce, thats $64000 worth of hard bullion your inviting a stranger to come and get off you.

Say you arrange a sale with a trustworthy buyer, do you expect them to pay in cash? 1. How would they explain a $64k cash withdrawal without explaining to the taxman what was bought 2. How would you explain a $64k cash deposit without explaining to the taxman what you sold.

Sometimes I dont think stackers get the big picture. Sure, there will be some who say "I will never sell my silver" (so why bother) or "I will use it to barter when SHTF" (I respect this depending on where you live).

My advice, keep your reciepts, keep your dates, keep a log. You never know if you will need it one day.
'

 

[wrcmad]

There are those (not Silver Stackers!) who would fly under the radar and not declare gains, perhaps understandable in the black economy, in which case it's hard to eat your cake and have it too and claim losses with no evidence.

You can't claim capital losses, just accumulate and carry them forward, or write them off against capital gains. So, if you don't make any capital gains to write them off against then it makes no difference.

 

[Macros_The_Black]

There are those (not Silver Stackers!) who would fly under the radar and not declare gains, perhaps understandable in the black economy, in which case it's hard to eat your cake and have it too and claim losses with no evidence.

You can't claim capital losses, just accumulate and carry them forward, or write them off against capital gains. So, if you don't make any capital gains to write them off against then it makes no difference.

True. A capital loss is only useful if crystallized against a gain, hence my point. If someone doesn't declare any gains, how can they expect to benefit from a loss?

An exception could be that in the future, there could be an unplanned CGT event resulting in a capital gain, from the sale of a non-bullion asset, in which case it would be handy to have a previous loss from a PM sale carried forward to 'claim'.