Public Message from South Gippsland Bullion.
- Thread starter iceblue
- Start date
bron.suchecki
Well-Known Member
There is no way Perth Mint or any company would publically state its "understanding" lest it be subsequently sued by someone following that advice and it turned out wrong.
While not having much to do with the GST law when I was at the Perth Mint, the arguments that the ATO now seem to be putting forward do not adhere to the understanding the industry had about what was bullion vs collectible. I can see that some rounds made by small local business are not "internationally traded" and that the ATO may feel that people have been too liberal in interpreting what is bullion, but it seems to me that the ATO has taken this too far. The focus on finish could bring in coloured coins etc and the reference to year of manufacture is particarly concerning. This ATO logic is out of line and overturns years of understanding as to what is bullion and what is collectible.
My guess is that after the GST scrap fraud issue, someone at the ATO come down like a ton of bricks on the department responsible for precious metals asking why hasn't anyone been monitoring this industry and so now they are going after it.
The issue I can see is that if the ATO is not challenged or asked to clarify for the industry exactly what is bullion and instead builds up opportunistic precedents via successive cases against the small guys (who will just roll over as they don't have the resources to fight ATO in court) then it enboldens the ATO (and makes it harder for the ATO to back down) to go after the big honey pot that would be the Perth Mint for back GST owed on certain coin issues.
The Perth Mint would then be facing a big court case which would set once and for all what "investment" means. The fact that until that court case smaller coin dealers went out of business and importation of competing "bullion" coins would be reduced would not be of concern to the Mint, and indeed be seen as strategically advantageous. It will be interesting to see if the Mint does nothing and leaves its distributors hanging out to dry or takes a leadership position on this ASAP, ideally IMO via the Gold Industry Group.
However, from a strategy point of view there is risk in this "do nothing until it affect us" approach as when you get into court you do not know where judges will fall on the "investment" issue and they may well come up with a definition that is more restrictive and results in GST being applied to what is currently considered bullion coins. I would consider it a high risk that a court may determine that "internationally traded" only means forms traded on a recognised exchange, in which case only 400oz and kilo bars would be covered. Furthermore, it could be argued in respect of the premium issue that a true investor would aim to minimise premium hence why would anyone pay over 5% for a coin when they could buy a cast bar or pooled allocated products backed by 400oz or kilo bars? Add in the fact that certain Perth Mint bullion coins have limited mintages and annual design changes and would it be inconcievable that a court may deem a Kangaroo as taxable?
While not having much to do with the GST law when I was at the Perth Mint, the arguments that the ATO now seem to be putting forward do not adhere to the understanding the industry had about what was bullion vs collectible. I can see that some rounds made by small local business are not "internationally traded" and that the ATO may feel that people have been too liberal in interpreting what is bullion, but it seems to me that the ATO has taken this too far. The focus on finish could bring in coloured coins etc and the reference to year of manufacture is particarly concerning. This ATO logic is out of line and overturns years of understanding as to what is bullion and what is collectible.
My guess is that after the GST scrap fraud issue, someone at the ATO come down like a ton of bricks on the department responsible for precious metals asking why hasn't anyone been monitoring this industry and so now they are going after it.
The issue I can see is that if the ATO is not challenged or asked to clarify for the industry exactly what is bullion and instead builds up opportunistic precedents via successive cases against the small guys (who will just roll over as they don't have the resources to fight ATO in court) then it enboldens the ATO (and makes it harder for the ATO to back down) to go after the big honey pot that would be the Perth Mint for back GST owed on certain coin issues.
The Perth Mint would then be facing a big court case which would set once and for all what "investment" means. The fact that until that court case smaller coin dealers went out of business and importation of competing "bullion" coins would be reduced would not be of concern to the Mint, and indeed be seen as strategically advantageous. It will be interesting to see if the Mint does nothing and leaves its distributors hanging out to dry or takes a leadership position on this ASAP, ideally IMO via the Gold Industry Group.
However, from a strategy point of view there is risk in this "do nothing until it affect us" approach as when you get into court you do not know where judges will fall on the "investment" issue and they may well come up with a definition that is more restrictive and results in GST being applied to what is currently considered bullion coins. I would consider it a high risk that a court may determine that "internationally traded" only means forms traded on a recognised exchange, in which case only 400oz and kilo bars would be covered. Furthermore, it could be argued in respect of the premium issue that a true investor would aim to minimise premium hence why would anyone pay over 5% for a coin when they could buy a cast bar or pooled allocated products backed by 400oz or kilo bars? Add in the fact that certain Perth Mint bullion coins have limited mintages and annual design changes and would it be inconcievable that a court may deem a Kangaroo as taxable?
bron.suchecki
Well-Known Member
ATO don't care about confidence, their officers get bonuses for how much "undeclared" tax revenue their find.
^ That is bad for retailers if its the case. No reason for them not to continue at this until challenged.
I knew the insurance industry did this (bonuses based on denials) but not the ATO.
I knew the insurance industry did this (bonuses based on denials) but not the ATO.
bron.suchecki
Well-Known Member
SilverDJ said:
Yes, no one would be making more than 10% net of all costs on bullion.
bron.suchecki said:
That just shows how ugly this is for the industry as a whole. No-one is making huge margins and no-one is looking to rip off the taxpayer or 'the system.'
If you kill this industry there is no winner, only losers.
If there is a legitimate need to straighten out the tax treatment of certain products then so be it.. but confusion and uncertainty can achieve nothing.
Shouldn't we be encouraging secondary industry in this country instead of gutting it?
HoldMeTender said:
Since when do government ever do anything other than stifle economies and growth? They only know how to suffocate, they do no know how to produce.
All they want to do is collect more taxes to support themselves, they have no interest in what The Prole's want or need.
That's why it's so disappointing. Anyone who has tried running a business will know how hard it can be. To have the government simply gut you and destroy everything you worked for is devastating.HoldMeTender said:
I was reading something about funding of startups a few days ago, and the extract below really stuck out. Success is often not about having a strong idea, an innovative technology and working hard. It is about who you lobby in government and regulation that is either supportive or antagonistic:
SilverDJ
Well-Known Member
HoldMeTender said:
But the government wins, because having people holding metal is not in their interest. They don't want us saving cash or metal, or anything else, they want us spending and in debt.
Of course this implies a higher level government conspiracy at play here, which of course I completely doubt there is such a thing. Just some person/department at the ATO coving their arse being seen to be doing something about a problem they think exists.
Coles and Woolies have less than 3% margin.SilverDJ said:
