Tax

[eadesy77]

Hi All,

I may be opening a can of worms here. Went and saw my accountant today. I have heard it over and over again that gold is tax free. From my conversation with the accountant he checked with the ATO and says it is not tax free. It is subject to income tax and also when you sell it you also need to add GST. So gold is alos subject to GST. This is nothing to do with the state but is federal so it is across all states.

Thoughts on this.

Cheers

 

[Swinging & digging]

If its income you should be able to right off your costs for getting it?
GPZ 7000 $10,700, fuel to the diggings for a weekend trip $150, motel charge for overnight stay $95, good second hand 4WD $18,000 etc.
Return in gold for the year ( hobbyist between 10 grams to 10 ounces ). I think the government would end up paying more in tax rebates that tax income derived from prospecting?

In the mid to late 80s the government looked at taxing recreational prospectors and ended up pulling out of the proposal for the above stated reasons.
I think your accountant has got it wrong? Unless the ATO is considering taxing gold prospecting as a hobby? It may be advisable to keep an honest log of your expenses and unless your are VERY LUCKY your expenses will exceed your income.

He may be referring to selling gold if you have invested in it and the price rose while you held it?
I just did my tax return yesterday and invested in gold bullion, i held it for 14 months and made a taxable profit on sale and i am paying capital gains tax on that profit.

 

[Balmain Bob]

Any money earned from gold / gem prospecting that is done as a hobby is tax free.

If you do it professionally then it is taxable but you are then able to claim expenses in deriving that income.

It fits into the same field as horse racing. The saturday arvo mug punter who jags a $50 000 trifecta takes the money tax free. But if he punts professionally then he is liable to declare it as income and pay tax on it and claim the associated costs in earning the income.

I just found this that goes some way to helping this topic.

https://austaxpbr.com.au/document/PBR_37527

Bob

 

[condor22]

Hobby Gold is not taxable, whether sold at a profit or not. If you found a 1oz nugget and sold it at current gold price, (less and commission) or you sold it at twice the price because it is collectable and someone is willing to pay for it, makes no difference.

A hobbyist can be seen as someone that has a job or other source of income, including Centrelink. A professional prospector that relies on finding gold as their only source of income is obliged to pay tax.

Where it may make a difference is that those in receipt of Centrelink payments are subject to income and asset tests, so gold found becomes an asset, but only if you declare it. also any sales that are not cash ie a cheque or bank transfer shows up in your bank account.

 

[Balmain Bob]

eadesy77
What I think that your accountant is on about is that if you buy bullion gold, ie, buy a refined 99.9% gold bar as an investment , then yes your are liable to pay tax on any capital gain made out of the investment when you sell it.

Also if you invest in gold bars they are regarded as a precious metal and are GST Free.

Here is a link to the ruling

http://law.ato.gov.au/atolaw/view.htm?docid=GST/GSTR200310/NAT/ATO/00001

cheers

Bob

 

[eadesy77]

eadesy77
What I think that your accountant is on about is that if you buy bullion gold, ie, buy a refined 99.9% gold bar as an investment , then yes your are liable to pay tax on any capital gain made out of the investment when you sell it.

Also if you invest in gold bars they are regarded as a precious metal and are GST Free.

Here is a link to the ruling

http://law.ato.gov.au/atolaw/view.htm?docid=GST/GSTR200310/NAT/ATO/00001

cheers

Bob

He as talking about prospecting and finding and selling nuggets. Also it was or doing it under a company name.

Cheers

 

[mbasko]

Why would you carry out hobby prospecting or fossicking under a company or business name? Unless you have a mining tenement of some description or carry out a professional prospecting service there is no need. You don't need to pay tax on hobby finds or sales & as stated above the tax office would be far worse off than us if they pursued it.
I've said it before & I'll say it again - I wish they would make me pay tax as my tax deductions would turn it into a lucrative hobby.

 

[eadesy77]

Why would you carry out hobby prospecting or fossicking under a company or business name? Unless you have a mining tenement of some description or carry out a professional prospecting service there is no need. You don't need to pay tax on hobby finds or sales & as stated above the tax office would be far worse off than us if they pursued it.
I've said it before & I'll say it again - I wish they would make me pay tax as my tax deductions would turn it into a lucrative hobby.

I do have a mining tenement.

Cheers

 

[Balmain Bob]

Yes doing it through a company , yes , then it will be taxable but you will be able to claim the cost associated with earning the income just like another other business

You just need to workout if you are going to be able to make a decent return on the investment or treat it as a hobby. You can have a mining tenement and still be a hobby prospector.

 

[eadesy77]

Yes doing it through a company , yes , then it will be taxable but you will be able to claim the cost associated with earning the income just like another other business

You just need to workout if you are going to be able to make a decent return on the investment or treat it as a hobby. You can have a mining tenement and still be a hobby prospector.

Will be claiming as many costs as possible.

Cheers

 

[mbasko]

Why would you carry out hobby prospecting or fossicking under a company or business name? Unless you have a mining tenement of some description or carry out a professional prospecting service there is no need. You don't need to pay tax on hobby finds or sales & as stated above the tax office would be far worse off than us if they pursued it.
I've said it before & I'll say it again - I wish they would make me pay tax as my tax deductions would turn it into a lucrative hobby.

I do have a mining tenement.

Cheers

Well that's completely different to the vast majority on here who are hobbyists & don't have mining tenements!
Gold isn't tax free if you are recovering it as part of a business. Owning a mining tenement would make it hard to convince the ATO you were doing it as a hobby but like you say claiming deductions would offset (or more than offset) it anyway in a@lot of small scale operations cases.

 

[RedDirtDigger]

I have a friend who has sold a lot of gold found as a hobbist and it is tax free. As others have mentioned its treated like a windfall or win on the horses. If you found a $200,000 nugget and sold it you do not have to even need to list it on your tax or declare it.

When you sell to a registered refiner/gold buyer you will need to submit a JP signed copy of your drivers license or passport and may need to fill in a tax declaration to say you do not have an ABN and GST is not applicable. Or some refiners have simple declarations that you sign and tick the box that the gold was found as a hobby.

Exceptions to the above are if you receive any government benefits in which case the law requires you declare any income you get (usually above a modest set amount if you are gaining certain benefits).

Also if you do not have a job and spend a lot of time prospecting and find a reasonable amount of gold the ATO may (probably would) claim you prospect as a business and the income is taxable. That's when you may need to consider getting an ABN and claiming your prospecting expenses. (but if you have a job and detect weekends that's OK your a hobbyist and you gold can be sold tax free)

I am not a tax professional and the above info is general (but I have gained advice from three different tax pros over the last few years on the issue and they confirmed the above).
BUT PLEASE GET YOUR OWN ADVICE FROM A QUALIFIED TAX PROFFESSIONAL

Cheers RDD

 

[eadesy77]

I have a friend who has sold a lot of gold found as a hobbist and it is tax free. As others have mentioned its treated like a windfall or win on the horses. If you found a $200,000 nugget and sold it you do not have to even need to list it on your tax or declare it.

When you sell to a registered refiner/gold buyer you will need to submit a JP signed copy of your drivers license or passport and may need to fill in a tax declaration to say you do not have an ABN and GST is not applicable. Or some refiners have simple declarations that you sign and tick the box that the gold was found as a hobby.

Exceptions to the above are if you receive any government benefits in which case the law requires you declare any income you get (usually above a modest set amount if you are gaining certain benefits).

Also if you do not have a job and spend a lot of time prospecting and find a reasonable amount of gold the ATO may (probably would) claim you prospect as a business and the income is taxable. That's when you may need to consider getting an ABN and claiming your prospecting expenses. (but if you have a job and detect weekends that's OK your a hobbyist and you gold can be sold tax free)

I am not a tax professional and the above info is general (but I have gained advice from three different tax pros over the last few years on the issue and they confirmed the above).
BUT PLEASE GET YOUR OWN ADVICE FROM A QUALIFIED TAX PROFFESSIONAL

Cheers RDD

Yep this is what I was talking about in my original post. So many people do have their own ideas etc say they talk to people that say this and that. I did go to PROFESSIONAL. He said it used to be tax free but federally the ATO changed the rules about 30 yrs ago. But like I also said situations are different. If you are a hobby or business. Like you said best to get Professional advice.

Cheers

 

[Westaus]

Bullion is treated as an investment if the purchase is above $500.00 keep it under this and you do not need to report it.
However if you have other hobbies such as collecting coins then unless a business(GST) still should report items above $500 or providing main income you do not need to declare it, such as ebay sales, however if you do start to sell a lot you may come under review from the ATO

EG1: 1 x 1oz Gold coin - approx $1500 should report as taxable item for FBT only!
EG2: 10 x 1/10oz Gold Coins approx $2000 (each coin is $200) not a re portable item.

$200,000 of sales of nuggets as above RDD you are correct that no tax would need to be paid, however the payment would have to reported under Austrade? for an amount of money exceeding $10K in a single transaction, the new terrorist laws and money laundering would pop up on someones screen though.

Like all things DYODD but that is my understanding.

Gold nuggets as you have not paid any money for them, hence you cannot make a "profit" from buying and selling, you do not need to declare it.

 

[Goldaddict21]

Some helpful information to steer me in the right direction. Cheers all