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Obligations of a non-citizen/non-resident investing in gold at the Perth Mint

Newbie

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Hi!

 

I am a non-citizen non-resident of Australia (I live in the US). I am not related to Australia in any way and have never visited it. I have no direct earnings from Australia as I do not directly own any investment in Australia (I do invest in US-based mutual funds that may invest in Australian stocks but I report on this in the US). I have no income at all generated in Australia.

 

I am considering investing in investment-grade gold bullion via a Perth Mint Depository account.

In short, I am trying to understand what my obligations are to the ATO (if any) based on an investment in gold bullion at the Perth Mint.

 

The Perth Mint indicates (at https://www.perthmint.com/storage/help/faq.html#are-there-any-taxes-or-restrictions-on-precious-meta...) that it "is currently not required to apply any withholding taxes on capital gains made on precious metals held with it. [...] International customers not deemed residents for tax purposes will generally not have Australian income or capital gains tax applied".

 

My investment in gold at the Perth Mint may result in a financial gain or loss that I would report to the IRS in the US. I am interpreting the last quoted sentence as indicating that I would owe no tax on a gain to the ATO: is this correct?

 

Going through the ATO's Individual tax return instructions for 2018 and having read all the information under "Do you need to lodge a tax return?", I understand that I do not have to lodge an Australian tax return for this investment: am I correct?


If correct, I see on page 6 of these instructions that in this case, a "Non-lodgment advice" may be needed. Would my investment at the Perth Mint mean that I would be obligated to complete a "Non-lodgment advice" for the current or any future tax year in which I maintain this investment at the Perth Mint?

 

Thank you!

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ATO Certified Response

Former Community Support

Replies 4

Hi @Mint,



Thanks for your patience! Ordinarily, non-residents have withholding amounts deducted  on income paid to them from Australia, such as interest, dividends and interest. The basic tax principle is that non-residents of Australia are only taxed in Australia on income that they receive from ‘sources’ in Australia.
 

However, as you hold gold bullion as an investment and it does not produce a return , no income will arise from holding it.
 

In some situations tax can arise on the disposal of such items. The main tax on disposal of assets under  Australian tax rules is capital gains tax. However, as a non-resident you are only taxed on capital gains or losses in Australia if the relevant asset is considered ‘taxable Australian property’. Investment in these assets does not constitute taxable Australian property and capital gains tax will not apply to you on sale of such property. 
 

Given that you are subject to US tax rules, If you used the gold bullion as part of a business or enterprise activity that you carry on, it could only be taxable in Australia if you were carrying on that activity through a permanent establishment in Australia.
 

Accordingly, no Australian tax would arise in the situation that you have described.


It's worth remembering that the information we provide here on Community is general in nature - if your situation changes, or if you need written advice on how tax law applies, it's best to write in for a private ruling.

Thanks!

7 REPLIES 7

Former Community Support

Replies 6

Hi @Mint,

 

Thanks for posting! We've reached out to our technical experts to ask them to consider the questions you've raised in your post, and we're aiming to get back to you in the next few days. We appreciate your patience. Smiley Happy

 

Thanks!

Newbie

Replies 5

Perfect! Looking forward to your technical experts' feedback.

 

Thank you in advance Smiley Happy

Most helpful response

ATO Certified Response

Former Community Support

Replies 4

Hi @Mint,



Thanks for your patience! Ordinarily, non-residents have withholding amounts deducted  on income paid to them from Australia, such as interest, dividends and interest. The basic tax principle is that non-residents of Australia are only taxed in Australia on income that they receive from ‘sources’ in Australia.
 

However, as you hold gold bullion as an investment and it does not produce a return , no income will arise from holding it.
 

In some situations tax can arise on the disposal of such items. The main tax on disposal of assets under  Australian tax rules is capital gains tax. However, as a non-resident you are only taxed on capital gains or losses in Australia if the relevant asset is considered ‘taxable Australian property’. Investment in these assets does not constitute taxable Australian property and capital gains tax will not apply to you on sale of such property. 
 

Given that you are subject to US tax rules, If you used the gold bullion as part of a business or enterprise activity that you carry on, it could only be taxable in Australia if you were carrying on that activity through a permanent establishment in Australia.
 

Accordingly, no Australian tax would arise in the situation that you have described.


It's worth remembering that the information we provide here on Community is general in nature - if your situation changes, or if you need written advice on how tax law applies, it's best to write in for a private ruling.

Thanks!

Newbie

Replies 3

Hi @AmandaE,

 

Thank you for your rapid feedback! It confirms my understanding regarding the absence of Australian taxation in my situation. Does it also mean that, since there is no tax due in my situation and I am a non-Austalian citizen and a non-Australian resident with no income from Australia, I have nothing to file/lodge with the ATO, i.e. neither an Australian individual tax return nor an Australian Non-lodgment advice?

 

Thank you in advance!

Former Community Support

Replies 2

Hi @Mint,

If you're not a resident of Australia for tax purposes, and if you aren't earning Australian sourced income, then nope, you don't have to lodge a return or non-lodgement advice.

If your situation changes, or if you want to confirm this information, check out our do I need to lodge calculator and save a copy of the outcome for your records.

Thanks!

Newbie

Replies 1

Hi @AmandaE,

 

Thank you for your clarifications.

 

I concur with the assessment that I do not have to lodge anything in my situation; however, I believe the do I need to lodge calculator only applies to residents of Australia for tax purposes per the answers ("Full year Australian resident", "Full year foreign resident", or "Part year Australian resident") to "Select your residency status during the 2017-18 income year". As I am a foreign non-resident of Australia, it seems that I cannot readily use the calculator to completion unless I choose "Full year foreign resident" to match my US residency.

 

With the latter assumption, the calculator has two possible outcomes depending on whether I assume a gain or a loss in my investment when answering "Select the business or investment events that applied to you during the 2017-18 income year":

  • With a gain and answering "None of the above", the result is "You do not need to lodge a tax return" and "You should submit a completed non-lodgment advice to the ATO".
  • With a loss and answering "You made a loss (including a capital or a non-capital loss on redemption of a traditional security) or you can claim such a loss you made in a previous year", the result is "You need to lodge a tax return".

Am I correct that this calculator does not apply to foreign non-residents, which would explain the results differing from your assessment? I would be happy to provide the above feedback using the link at the bottom of the do I need to lodge calculator webpage.

 

Should I visit Australia on a week-long business trip or for say a month-long vacation (in either case continuing to earn no income whatsoever from Australian sources), would I then be considered a foreign resident of Australia for tax purposes, or would I continue to be considered a foreign non-resident of Australia for tax purposes?

 

Thank you in advance!

Newbie

Replies 0

Hi @AmandaE,

 

Assuming I am a "Full year foreign resident" in the calculator, I realized that I perhaps should not tick "You made a loss" even if I have a loss on my gold bullion investment because, as you indicated, as a non Australian resident I am "only taxed on capital gains or losses in Australia if the relevant asset is considered ‘taxable Australian property’".

 

Since gold bullion is not considered ‘taxable Australian property’ in my situation, making a loss or a gain on it is irrelevant in the context of "Select the business or investment events that applied to you during the 2017-18 income year". In other words, the loss in gold bullion is not considered a capital loss from a CGT event in my situation, and I need not tick "You made a loss (including a capital or a non-capital loss on redemption of a traditional security) or you can claim such a loss you made in a previous year".

 

If this revised interpretation is correct, and as previously stated, I answer "None of the above" to "Select the business or investment events that applied to you during the 2017-18 income year", the result is "You do not need to lodge a tax return" and "You should submit a completed non-lodgment advice to the ATO". The latter quote (re the non-lodgment advice) uses "should" rather than "must" so I interpret it as meaning that I need not submit a completed non-lodgment advice to the ATO, in line with your assessment though this is confusing.

 

Looking forward to hopefully final clarifications!

 

Thank you.