Investing in gold is the smart thing to do if you want security in your future. There are a lot of ways you can invest in gold. One of the best ways is to buy gold bullion bars and coins. You may have heard people talk about how much gold is a great hedge in times of crisis. This is because whilst paper currencies like the US or Australian dollar are susceptible to inflation and economic uncertainty, geopolitical risks, and pandemic, gold thrives in such situations and does not lose value. In fact, many people are falling back on their gold investments during this critical time in the history of the world where we are dealing with a novel viral pandemic. Having gold right now could help you weather the hard-economic reality that everyone is facing.
Gold bullion is easy and convenient to liquidate. There are hundreds of gold dealers all over Australia that buy used gold for cash to resell to refineries. In addition to worrying about the amount of money, they stand to make when they sell gold bullion, a lot of people often wonder what the tax implications are when you sell or buy gold bullion in Australia.
Capital Gains Tax is applicable to investment grade gold products like bullion gold bars and bullion coins. These products attract Goods and Services Tax (GST or Sales Tax and VAT in other countries). 10% GST will apply to gold products that except on gold products that meet the following:
- Gold with a 99.5% purity
- Gold products that are tradeable internationally that have engravings identifying the manufacturer, fineness, and quality.
Capital Gains Tax will apply if the investment-grade bullion you have to sell has greater value at the time you sell compared to the value it had when you bought it.
Can you avoid paying tax on your gold?
Many people would like to keep as much money for themselves as they can and would want ways to avoid or circumvent the tax issue. If you are buying and selling smaller gold bullion bars and coins, there might be so little made in that transaction, you could end up paying very little Capital Gains on your gold or none.
You can also avoid a huge Capital Gains Tax bill by not selling all your gold at once. Here’s an example of how this could be done:
Let’s assume, you bought gold bars or coins over a decade ago and they cost you $60,000. And in less than 3 years, the value rises to $80,000 which translates into a $20,000 profit when you sell. That is a significant profit, the kind that will pique the interest of the Tax Office. To stay under the radar, a lot of gold sellers sell only a fraction of the gold at one time. If you do it this way, you will get an $11,000 tax-free profit. The remaining gold can be sold in the following year. You do need to keep in mind that the price of gold is always in flux, there is no telling whether the price will be just as high next year – when in doubt speak to a professional.