6Class of goods determined to be incidental valuable metal goods

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.

Note: Section 66-17 of the Act modifies the effect of subsections 29-10(3) (which is about records relating to attributing the input tax credits for creditable acquisitions) and 29‑20(3) (which is about records relating to attributing decreasing adjustments) of the Act if an entity makes a creditable acquisition of second-hand goods and the supply of the goods to the entity was not a taxable supply.

Example: XYZ Pty Ltd is a licensed second-hand goods dealer that operates in Tasmania and is registered for GST. The company purchases an 18 carat gold 55 cm necklace that is in original condition from Eloise who is not registered for GST. At the time of purchase of the necklace, XYZ Pty Ltd takes several digital photographs of the necklace. The photographs are date-stamped, as the date each photograph was taken can be identified from each photograph’s metadata. A week later XYZ Pty Ltd sells the necklace to Teresa who is an Australian resident and is not registered for GST.

XYZ Pty Ltd retains these photographs and also records the purchase and sale of the necklace as evidence. XYZ Pty Ltd ensures that it keeps records including:

• the name, address and GST registration status of the seller of the necklace, Eloise;