Need help on Capital Gains Tax

O

ozxlnc

New Member
To the experts in the trade...

Here's my question:

If I purchase a collectible (silver coins) worth less than $ 500 at 10 different times, would I be paying CGT if I sold all my coins in one transaction?

**FYI I am new to Gold/Silver markets, want to know more about savings on my taxes.

Cheers....
 
http://www.ato.gov.au/individuals/content.asp?doc=/content/00208572.htm&page=12#P283_26669

"If you dispose of individual collectables that you would usually dispose of as a set, you are exempt from paying CGT only if you acquired the set for $500 or less on or after 16 December 1995."

Your coins are not "usually dispose[d] of as a set" and so each is treated individually.

I am not a tax expert but I can read the ATO site. :D Naturally you should ask a tax expert :)
 
Roll of 20 kooks are not a set, but you can not say you acquired them individually unless you take off the plastic wrapping or you have at least the 2010 or earlier version. With 1995 or earlier kooks you should be ok even with a monster box if you are a long time collector.
 
Bullion != collectibles. If it's a bullion coin traded on it's intrinsic/spot value, I doubt you could legitimately claim the $500 CGT threshold.

You could probably use the rule for things like proof bullion coins, as they generally trade with a numismatic premium over spot, but I can't see how you could apply this rule to say a regular 1/4oz gold bullion coin bought for $400.

Check with an accountant and hope they have an answer.
 
No wonder people like the 200 koala proof coins. Not even different in price atm.
 
Much of the feedback in CGT threads is "check with your tax professional."

Can anyone who has done this please recommend a tax professional that has experience with this aspect of tax law and can give a direct answer? I could be wrong but I can't imagine the average suburban tax agent having faced a question like "What are the CGT implications of this $700 roll of 20 American Silver Eagles? The ATO website suggests they are exempt, is this true?"
 
Stacks On said:
Much of the feedback in CGT threads is "check with your tax professional."

Can anyone who has done this please recommend a tax professional that has experience with this aspect of tax law and can give a direct answer? I could be wrong but I can't imagine the average suburban tax agent having faced a question like "What are the CGT implications of this $700 roll of 20 American Silver Eagles? The ATO website suggests they are exempt, is this true?"
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My experience is if someone not sure or do not want to take responsibility, their answer is, ask your financial adviser or ask your tax agent. When you actually ask them they often don't know the answer either, but they want to look smart and give you a safe but not always the correct answer because they want to defend themselves against any liability.
The best I can suggest is do you own investigations and ask the advisers after to explain to you why your assumption is not correct. Listen to their objections if any, make further research if necessary and if you still feel you have a good case go back to the advisor present your case again.
 
Ok I read the text now and looks very clear to me. Buy a regular $200 gold kola record the purchase price and when you sell it pay CGT regardless of the purchase price. Buy the Proof version record the purchase price under $500 and no CGT when you sell it.
 
projack said:
Ok I read the text now and looks very clear to me. Buy a regular $200 gold kola record the purchase price and when you sell it pay CGT regardless of the purchase price. Buy the Proof version record the purchase price under $500 and no CGT when you sell it.
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Sounds reasonable!!!
 
I have Lunar II proof mouse, ox, and rabbit $75/each including postage
No CGT ever.
Buy the regular for $35 sell them in 10 years for 235 pay CGT =$100 net profit $100
Buy my proof coin $75 sell them in 10 years for at least $275 no CGT net profit $200
 
I have to agree. Looks to me like paying ~10% over spot price for a proof coin under $500 and have a nicer profit when selling in a decade legally tax free.
 
There is an old Silver Stackers thread on the same topic at http://forums.silverstackers.com/topic-192-capital-gain-tax-on-precious-metals-in-australia.html and another one on Top Stocks at http://www.topstocks.com.au/stock_discussion_forum.php?action=show_thread&threadid=403869.

My hope is that all this will turn out as follows (will try to track down a tax agent to see if these ramblings hold water):

1: ATO says "collectables" acquired for $500 or less are exempt from CGT.

2: ATO says "coins" are collectables.

3: The Silver Eagle et al. are legal tender coins struck by a government mint (doesn't matter if it is a bullion coin, proof coin, uncirculated coin or whatever-else coin, they are all "coins").

4: When (for example) purchased in a tube of 20 for a total of $700, the individual coins are "purchased" for 700/20 = $35 each (at time of writing).

5: The ATO says you can't use this exemption when you "dispose of collectables individually that you would usually dispose of as a set" if the "set" is worth more than $500.

6: Our tube of 20 ASEs is definitely worth more than $500 but it is not a "set" since:
a) it is just 20 randomly-selected identical coins (same quality, value, composition, year of minting, etc.) that happened to end up in the same tube together.
b) these coins have no special relationship with each other any more than 20 random 10c coins that happen to end up in your money box together.
c) if you take away one coin from the tube, the value of the tube would drop by exactly the value of that one missing coin.
d) you don't lose additional value by "breaking the set" as there was no "set" to begin with.
e) the whole point of purchasing 20 1oz coins is to give yourself the ability to sell them individually.
f) if you just wanted 20oz of silver, you would have bought a 20oz bar and saved yourself the considerable premium you are hit with when buying 1oz coins.

Therefore, if my layman reasoning is correct, any single ASE (or Maple or Philharmonic or Kookaburra etc etc) is a collectable acquired for under $500 and hence is CGT free. Either bring on $500/oz silver or a tax agent that can point out any legal holes in this argument (which if they exist are likely going to be large enough to drive a 5x1000oz COMEX contract through).

As with all forum posts, none of this constitutes financial advice and the ATO would likely not accept "some guy on the internet thinks it's probably OK" as an excuse for not paying your tax :)
 
I think the problem with the above is the ATO says "coins" are collectables. Where exactly does it say this. The whole GST public ruling distinguishes bullion from collectable coins (as GST applies to collectable coins) on the basis of price being based on spot and so forth. I cannot see the ATO contradicting this GST ruling when it comes to a ruling for CGT purposes on bullion vs collectable, especially since giving a CGT ruling as you describe is a loophole for tax.
 
bron suchecki said:
I think the problem with the above is the ATO says "coins" are collectables. Where exactly does it say this.
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See http://www.ato.gov.au/corporate/content.asp?doc=/content/00208572.htm&page=12#P310_29582 (The Exemptions section under "Introduction to capital gains tax")

Collectables

Collectables include the following items used or kept mainly for the personal use or enjoyment of you or your associates:

* paintings, sculptures, drawings, engravings or photographs; reproductions of these items; or property of a similar description or use
* jewellery
* antiques
* coins or medallions
* rare folios, manuscripts or books, and
* postage stamps or first day covers.
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bron suchecki said:
The whole GST public ruling distinguishes bullion from collectable coins (as GST applies to collectable coins) on the basis of price being based on spot and so forth. I cannot see the ATO contradicting this GST ruling when it comes to a ruling for CGT purposes on bullion vs collectable, especially since giving a CGT ruling as you describe is a loophole for tax.
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Forgive me but I don't see the contradiction (the finer points of tax law are not one of my strengths). My understanding of the GST ruling is that as far as coins are concerned, it distinguishes between bullion coins (intended for the trading market) and proof/numismatic coins (intended to be collectables). Proof/numismatic coins are traded on the basis of their numismatic value (rarity, condition, etc) and are not precious metals for GST purposes and thus do attact GST. On the other hand, bullion coins are traded by reference to spot price and so are precious metals for GST purposes and so do not attract GST.

The hypothetical tube of 20 Eagles used in my example are intended to be the regular run-of-the-mill American Silver Eagles that are churned out by the tens of millions ("...in quantities sufficient to meet public demand...") and thus are bullion coins rather than special proof/numismatic coins. Taking the GST exemption of bullion coins one step further to say that they are also eligible for the CGT exemption keeps the general "tax-exempt" status of the bullion coins intact without contradicting the GST rulings on either type of coin (I hope).

I suppose the question is then raised of whether for CGT purposes you can have a collection of bullion coins as opposed to a collection of collectable (i.e. proof/numismatic) coins? People do collect all kinds of strange things that were never intended to be collected...
 
kram said:
The applicant bought 2 kg of gold on 10 May 1978 for $9,989.00

Nice!
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Thats only about 6.5% compound interest to get to todays value. Housing has increased at the rate of 8.4% over a similar time frame.
 
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