Gold Purchases And Demonetisation
With the demonetisation of Rs.500 and Rs.1,000 notes coming into effect from 9th November 2016, customers retreated from gold purchases fearing scrutiny from the IT Department. On 8th November, after the announcement was made, there was a momentary gold rush as people sought out gold to dump their black money. But afterwards, jewellers and retailers saw empty stores at the peak of the wedding season. The demonetisation scheme was implemented to curb black money and counterfeit notes in circulation. To avoid PAN regulations, customers paid stores extra to divide the purchase into separate bills of smaller amounts not amounting to Rs.2 lakhs. The government brought jewellers under surveillance to ensure that no excessive gold sales were made with black money.
The demonetisation scheme caused a severe cash crunch in the Indian economy as ATMs and banks faced a shortage of new notes. Demand for gold slowly picked up but might take months to normalise.
How To Buy Gold In Australia The Ultimate Guide To Investing In Gold
This is The Daily Reckoning Australias comprehensive guide to investing in gold in Australia.
In it we cover:
We hope you enjoy learning about gold from an Australian perspective today.
That doesnt mean you cant potentially see big swings in price, particularly with some ASX gold stocks. But what it does mean is that investing in gold requires a certain long-term perspective one that recognises the shiny metals unique history. With markets more chaotic than ever we think understanding golds place in the monetary system is absolutely vital.
So, lets dive in
S To Consider Before You Start Investing In Gold In Australia
As with any investment, set aside only what you can afford to lose.
Here are some important steps to think about:
With these in place, now for a bit about the factors influencing the gold price
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Opting To Tax If You Produce Or Transform Gold Into Investment Gold
If youre a taxable person who supplies investment gold of a description in section 2.1, or which you have produced or transformed yourself, you may opt to tax your supply, if made to a taxable person, but you need to notify us first. The next paragraph has force of law.
You must notify our if you intend to opt to tax. If you do not receive an acknowledgement within 28 days, you must check that they have received the notification.
How The Scheme Works
If youre liable to use the Special Accounting Scheme, you should follow this procedure.
Step 1 Are you a UK VAT-registered business?
If yes, go to step 3.If no, go to step 2.
Step 2 Are you liable to be registered for VAT?
If yes, apply to register. Failure to do so may make you liable to financial penalties.If no, youre not making taxable supplies.
Step 3 Is this a supply of gold of a type described in paragraph 11.2?
If yes, go to step 5 for gold coins, or step 7 for other supplies of gold.If no, go to step 4.
Step 4 Is this a supply of gold coins?
If yes, go to step 5.If no, the supply is not within the scope of the Special Accounting Scheme. You must charge VAT to your customer who should pay it to you. You must issue a VAT invoice and account for the VAT to HMRC.
Step 5 Are the coins investment gold coins?
If yes, go to step 6.
Step 6 Are you a producer or transformer of investment gold coins who has opted to tax the supply?
If yes, go to step 7. For further information see section 4.If no, your supply is exempt and the Special Accounting Scheme does not apply unless youre a member or are dealing with a member of the London Bullion Market Association.For further information see paragraph 11.5.
Step 7 Are you satisfied your buyer is a UK VAT-registered business?
If no, the Special Accounting Scheme does not apply.
For further information see paragraphs 11.4 and 11.6.
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Tax Reporting Requirements For Bullion Transactions
The information provided herein is for educational purposes only and is not intended to serve as financial or tax advice. Please consult your tax professional for advice regarding your individual financial or tax situation.
There are two circumstances in which precious metals dealers are legally obligated to report consumer transactions to the IRS:
The former is a tax issue and will be discussed below. The latter is an anti-money laundering issue and is not the subject of this post.
When a consumer sells a reportable quantity of specific bullion or coins, precious metals dealers are required to file Form 1099-B with the IRS. Failure to follow reporting requirements can result in the IRS issuing monetary fines, or even criminal charges against both the precious metal dealer and the customer. It is SellYourGold.com’s policy to file Form 1099-B in accordance with IRS guidelines for all reportable transactions. Please be advised that while SellYourGold.com is required to provide certain information about our customers, these details remain strictly confidential between us and the IRS at no point will any third party have access to their private information.
How Much Silver Can I Buy Without Reporting
For simplicitys sake, when it comes to buying and selling bullion, the United States Government wants to know two things: if you are laundering money, or if you are avoiding taxes.
With that being said, the reporting for bullion is more stringent on the selling side than on the buying side. For a detailed guide on SELLING precious metals, see our guide: IRS 1099 Reporting Are Bullion Sales Private?
On the buying side, the rules are a little more straight forward any CASH purchases of $10,000 dollars or more may be reportable.
If you buy silver from a dealer and you pay with physical cash or a cashiers check and the amount is over $10,000 then the dealer must report it to the IRS via an IRS 8300 Form.
The reason this applies only to cash and cashiers checks is to prevent money laundering. The use of cash is anonymous as are some cashiers checks and that is why the $10,000 rule is in place for these two methods of payment.
The $10,000 dollar cash limit applies to a single transaction or a series of related transactions within a one year period. For example, if you buy $5,000 dollars of silver in cash from a dealer in the morning, and then $5,000 dollars worth of silver in cash in the evening then more than likely you are trying to avoid being reported and the dealer would be required to file an IRS 8300 form. But if the transactions are not related, then they are treated as separate purchases.
So how do the dealers know if transactions are related?
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When You Can Reclaim Input Tax
If you opt to tax a particular supply of investment gold youll be able to reclaim all the related input tax as youll be making a taxable supply of investment gold. To reclaim all your input tax youll need to be able to show that none of your input tax relates to any exempt supplies of investment gold.
If you make exempt supplies and are registered for VAT, you may not be able to reclaim all of the input tax you incur. Normally you can only reclaim input tax incurred on goods and services used, or to be used, in making taxable supplies. Youll find more about this in Partial exemption . But there are special rules about reclaiming input tax you incur on some of the goods and services that are directly attributable to your exempt supplies of investment gold.
These special rules are set out in paragraphs 5.2, 5.3 and 5.4.
Legal Issues And Gold
Is there sales tax on gold ?
Not in our home state of Arizona. Therefore, purchases from Onlygold.com are free of sales taxes.
Are gold bullion coins legal tender ?
Yes, most of them are. This nominal face value allows them to travel across national borders without the taxation or fees imposed by many countries on bullion itself.
Do bullion coins come with a certificate of authenticity ?
Yes, a makers mark and statement of weight and fineness is stamped directly onto gold bullion, whether coins or ingots. The bullion itself, in effect, bears its own certificate from whichever Mint or refiner produced it. Fortunately, gold is an element with a unique specific gravity, and other attributes which make it very easy to test for authenticity. The ancient Egyptians pioneered the acid test for gold, and any jeweler, pawnbroker, or high school chemistry teacher can demonstrate the basics of gold.
Are there counterfeit gold coins ?
Yes, over the centuries, crude copies of gold coins have been made. But because of golds unique density , these copies are not very convincing. Once you hold a real gold coin in your hand, and you feel the heft and density of it, you realize that gold is simply hard to imitate. Of course, we recommend that you know your supplier when buying gold, just as you would with anything of real value.
Was gold illegal to own at one time ?
When were gold restrictions lifted ?
Is there any limit on how much gold I can own ?
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Is There Any Government Reporting When Buying Gold Silver Or Other Precious Metal Bullion Products From Bullion Dealers
Bullion dealers are not required to report any compliant bullion buying transactions to any government agencies.
Almost all competent high volume online bullion dealers purposely set up their payment policies to minimize suspicious order potentiality. Most competant high volume bullion dealers want to avoid manual would-be daily inspections required which could produce additional costs, time requirements, and energies expended by bullion dealer staffs in order to properly report any suspicious gold, platinum, palladium, silver bullion or other customer buying transactions to government agencies.
How To Work Out If The Supply Is Within The Scope Of Uk Vat
If youre making or receiving supplies of gold, other than investment gold the following decision table explains the VAT liability of the supply.
Step 1 Is the gold allocated?
If yes, go to step 2.If no, go to step 3.
Step 2 Is the gold in the UK?
If yes, go to step 4.If no, the supply is outside the scope of UK VAT.
Step 3 Does the supplier belong in the UK?
If yes, go to step 5.If no, go to step 6.
Step 4 Is the gold exported?
If yes, the supply is zero-rated.If no, the supply is standard-rated.
Step 5 Does the customer belong in the UK?
If yes, the supply is tandard rated.If no, the supply is outside the scope of UK VAT.
Step 6 Is the customer a business which belongs in the UK?
If yes, the customer accounts for VAT on the supply at the standard rate.
If no, the supply is outside the scope of UK VAT, see section 11.
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Opting To Tax If You Act As An Agent
If youre acting for a named principal and your principal has opted to tax, you may opt to tax your services in so far as they are related to your principals opted supplies of investment gold.
This next 2 sentences have force of law.
You must inform our that you intend to opt to tax your services. If you do not receive an acknowledgement within 28 days, you must check that they have received the notification.
How To Sell Gold And Other Precious Metals Tax Free Updated 10/1/2010
See 10/1/2010 Update Below
Keith Fitz-Gerald from MoneyMorning.com wrote a negative article on gold yesterday called Warning: You May Not be Making as Much on Gold as You Think.
In this article Fitz-Gerald was trying to warn gold investors by trying to rain on their parade about all the taxes they would have to pay on their gains. This negativity may convince some not to invest in precious metals, so I made a comment to his post telling the readers of MoneyMorning that there are solutions available to avoid paying taxes on the gains one has made on gold.
So far my comment hasnt been posted. EDIT: The comment has now been posted, #18.
Unbeknownst to most investors, gold is considered a collectible not a capital asset. In plain English, this means that despite the fact that many people believe they are investing in gold, the Internal Revenue Service believes that they are collecting it.
Precious metals are a completely different story. Profits from these investments can be subject to a 28% maximum tax rate if held for more than 12 months. And if they are sold in less than a year, the profits count as ordinary income.
There was also a comment by a poster named Dave that I referenced as misleading. Daves comment was
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The Purpose Of Penalties On Gold
Gold frequently moves between the taxable and exempt markets and can be easily transformed into taxable gold or gold products such as jewellery. We need a full audit trail in order to make sure that VAT is properly accounted for when this happens.
The notification, invoicing, and record keeping requirements described in section 3, section 6 and section 7 provide this audit trail. The Finance Act 2000 introduced a penalty, chargeable when businesses do not satisfy these requirements.
If youre assessed for this penalty it does not mean that youre suspected of involvement in a VAT fraud.
Acceptable Quantity Of Gold
CBDT has clarified the prescribed quantity of gold considered allowable. Gold within this limit will not be seized even at the time of search at the assessees premises. A married woman can have up to 500g of gold. An unmarried woman can have up to 250g of gold. A man can have up to 100g of gold. Even a higher quantity of gold may be left unseized based on the assessing officers discretion. Factors such as family customs and traditions can be considered for such a decision. It is important to note that the limits prescribed above apply only to jewellery held by members of the family. In the case of jewellery found belonging to any other person, the same can be seized and confiscated.
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Cost Basis Of Physical Gold And Silver
The amount of tax owed on the sale of precious metals depends on the cost basis of the metals themselves. If you purchase the metals yourself, then the cost basis is equal to the amount paid for the metal. The IRS does allow you to add certain costs to the basis, which can reduce your tax liability in the future. Certain items, such as the cost of appraisals, can be added.
There are two special scenarios for calculating the cost basis of physical gold or silver. First, if you receive the metals as a gift, the cost basis is equal to the market value of the metals on the date that the gifter purchased them. If at the time of gifting the market value of the metals is less than what the person giving them to you paid, then the cost basis is equal to the market value on the day that you receive the gift. As for the second special scenario, if you inherit gold or silver, then the cost basis is equal to the market value on the date of death of the person from whom you inherited the metals.
The Legal Way To Avoid Crypto Taxes And Reporting
Bitcoin and cryptocurrencies offer investors, traders, and HODLers the rare opportunity for asymmetrical gains. A little money can turn into a lot of money quickly.
But the IRS wants its cut.
You probably know by now that every purchase and sale using Bitcoin or any other altcoin is going to be taxed like a stock if you live in the US. This means if the value of your Bitcoin or altcoin increased at all before you sold it, you owe the IRS money.
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Congressional Bill To End Silver Taxes Gold Taxes Bullion Taxes
Maybe youll rally around a Congressional House Bill that somehow passes and reestablishes US citizens ability to use and or sell specific gold and silver bullion items, without having to consult their tax professionals in the process.
Of course you could buy, hold, and then perhaps sell bullion in your IRA for a profit, while often simultaneously protecting yourself against potential lawsuits. Indeed with Traditional bullion IRAs or Roth IRAs, until you actually begin withdrawing funds from the IRA itself, your profits from your bullion sales can then of course be used to buy and invest in other qualified IRA investment assets and asset classes if you so choose.