AAT upholds ATO’s decision to reject gold GST claims

The Australian Taxation Office (ATO) has announced that the Administrative Appeals Tribunal (AAT) has rejected a taxpayer’s claim for GST refunds in relation to their claim to be operating a gold refinery.

Very Important Business (VIB) had claimed it operated a precious metal refinery in the last quarter of 2015, and was entitled to input tax credits with respect to purchases of scrap gold it made in the course of its business.

VIB also claimed its subsequent supplies of precious metal (that is, gold it had refined into bullion) to so-called dealers in precious metal were GST-free supplies.

The Commissioner of Taxation disputed those propositions, explaining that it had many concerns about VIB’s affairs. In 2016, the commissioner withheld GST refunds that would otherwise have been paid to VIB, arguing that the company’s record-keeping was seriously deficient.

In relation to certain acquisitions of scrap gold supposedly made by VIB from unregistered suppliers, the commissioner submitted that VIB was not entitled to claim input tax credits under the second-hand goods rules in the GST Act because it did not satisfy the requisite test.

The AAT upheld the ATO's decision, concluding that VIB was not able to claim any input tax credits on any supplies of scrap gold, including purported acquisitions from unregistered suppliers in the quarterly tax period.

The decision is final, with the appeal period having now ended.

Deputy commissioner Jeremy Geale said the case forms an important part of the ATO’s ongoing compliance activities in the precious metals industry.

“We welcome the decision of the AAT. We have been working hard to protect honest businesses in the precious metals industry by tackling the significant non-compliance of some participants who have been incorrectly claiming GST refunds,” he said.

The case follows two other recent AAT decisions concerning GST that have affirmed the commissioner’s decision to disallow input tax credits claimed by precious metal industry participants.

“These are complex cases that require difficult and lengthy investigative work. This decision, along with the two earlier decisions, should provide the community reassurance that the ATO is doing the work that is needed in this industry to address significant non-compliance.

“We will continue to work hard to ensure that the GST system is not being used inappropriately in any industry,” Mr Geale said.