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The Australian Taxation Office has issued guidance on the application of a goods and services tax reverse charge for the precious metals industry.
From January 1, 2017, business-to-business sales of precious metal, including scrap gold, can be reverse charged.
The ATO explained that under a voluntary reverse charge agreement, the buyer will pay GST (which is normally paid by the seller) on behalf of the seller. The buyer must pay the GST amount when they lodge their business activity statement (BAS). The buyer will also need to provide the ATO with details of any reverse charge of GST they are liable to pay on behalf of the seller. Where the buyer is entitled to a GST refund when lodging their BAS, they can direct the ATO to use the refund amount to pay the GST they owe on behalf of the suppliers.
A voluntary reverse charge agreement will only cover taxable sales of precious metals, including: goods that consist of gold, silver, or platinum, even if those products are not classified as precious metals under GST law; gold ore; gold granules, and gold bars that are not in investment form.
The ATO said that one of the benefits of entering into a voluntary reverse charge agreement is that it is easier for sellers and buyers to meet their GST obligations, as the seller does not physically collect GST on the sale and the buyer has no refund to claim. It added that such agreements decrease the compliance risk rating for the seller and buyer, meaning that the ATO will make fewer inquiries about their sales, purchases, and claims. The change is also intended to promote a level playing field so that members of the precious metals industry meet their GST obligations fairly.
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