Minister O’Dwyer made the GST determination: A New Tax System (Goods and Services Tax) (Incidental Valuable Metal Goods) Determination 2017 (No 1) on Monday 16 Oct 2017 and it was registered on the Federal Register of Legislation on Wed 18.10.2017.
The Determination specifies a class of goods that are ‘incidental valuable metal goods’ for the purposes of the definition of on that term s195-1 of the GST Act. An incidental valuable metal good within the definition in the Act is not prevented from being “second-hand goods” for the purposes of the Act. The GST law allows entities to claim input tax credits for second-hand goods acquired for the purposes of sale or exchange (but not for manufacture), in the ordinary course of their business, even though the supply of the goods to them was not a taxable supply.
The Treasury Laws Amendment (GST Integrity) Act 2017 amended the definition of second-hand goods in s 195-1 to ensure that entities cannot exploit the special tax treatment for second-hand goods to claim input tax credits by manipulating the form of metals such as gold, silver and platinum. These amendments prevent goods to the extent they contain such metal, from being second-hand goods. However, special rules also ensure that a range of goods are not inappropriately excluded from the second-hand goods definition. Accordingly, the Minister may prospectively determine a class of goods that are incidental valuable metal goods. Such goods are not precluded from being second-hand goods.
The Minister made this determination under subparagraph (c)(iii) of the definition of incidental valuable metal goods in section 195‑1 of the A New Tax System (Goods and Services Tax) Act 1999, which provides as follows:
195-1 Dictionary
In this Act, except so far as the contrary intention appears:
incidental valuable metal goods
means goods:
(a) acquired for the purposes of sale or exchange (but not for manufacture) in the ordinary course of *business; and
(b) that consist wholly or partly of *valuable metal; and
(c) in relation to which any of the following applies:
(i) the goods are collectables or antiques, and the goods are not *precious metals;
(ii) at the time of the acquisition, the market value of the goods exceeds the *valuable metal threshold;
(iii) the goods are in a class determined by the Minister, by legislative instrument, for the purposes of this subparagraph.
In order to be considered incidental valuable metal goods, the goods must satisfy the requirements in paras (a) and (b) of the definition of incidental valuable metal goods in s 195‑1. These criteria are replicated in paras 6(1)(a) and (b) of the Determination. That is, the goods must be acquired for the purposes of sale or exchange (but not for manufacture) in the ordinary course of business and must consist wholly or partly of valuable metal.
The full text of this privileged class of goods (in the Minister’s determination) is:
6 Class of goods determined to be incidental valuable metal goods
(1) This section determines, for the purposes of subparagraph (c)(iii) of the definition of incidental valuable metal goods in section 195-1 of the Act, a class of goods that consists of items, each of which meets these conditions:
(a) an entity (the dealer) acquires the item, from an entity that is not registered, for the purposes of sale or exchange (but not for manufacture) in the ordinary course of business;
(b) the item consists wholly or partly of valuable metal;
(c) the physical characteristics of the valuable metal in the item have been substantially transformed by means of a manufacturing process, or by skilled craftsmanship, that was undertaken to produce the item;
(d) the item is commercially distinct from the valuable metal in it;
(e) the dealer supplies the item to an Australian consumer;
(f) at the time of the supply to the Australian consumer, the dealer holds a date-stamped photograph of the item, which allows the physical characteristics of the item to be clearly identified at that time;
(g) throughout the period starting when the dealer acquires the item and ending when the dealer supplies the item to the Australian consumer, the dealer:
(i) is registered; and
(ii) is licensed as a second-hand goods dealer in every State or Territory in Australia in which the supplier carries on a business of dealing in second-hand goods; and
(iii) satisfies the record keeping obligations under subsections 29-10(3) and 29-20(3) of the Act, as modified by section 66-17 of the Act to the extent the entity is required to comply with those obligations.
DATE OF EFFECT: The Determination commences on Thur 19.10.2017.
[Federal Register of Legislation: Determination (F2017L01367); FJM; LTN 200, 19/10/17; TM Oct 2017]