ACN 154 - Federal Court of Australia, Full Court finds that gold refining included refining gold that was already at the precious metal level of purity

ETA Sched. VI, Pt. V, s. 6.3 zero-rates “a supply made to a non-resident person that is not registered [for GST/HST purposes] of … a service of refining a metal to produce a precious metal.”

An Australian GST provision effectively zero-rated a supply of “precious metal” (relevantly defined as gold, in an investment form, of at least 99.5% fineness) if it was the “first supply of that precious metal after its refining by … the supplier”. The Australian Commissioner argued that an Australian company did not qualify as refining gold “scrap” purchased by it (which was generally of at least 99.99% fineness, but nevertheless was scrap gold because it was not in investment form) because its mooted refining was of gold that thus already exceeded the statutory threshold of 99.95% fineness.

In rejecting this submission, the Full Court stated:

The ordinary meaning of the word “refining” … and the statutory context suggest that the word “refining” in s 38-385 is referring to a process by which metal is brought to a finer state or form. It may be accepted that, as the Commissioner submits, this is concerned with increasing the metallic fineness of the metal. But this does not require that the process be directed towards increasing the metallic fineness of the metal above the requisite standard of fineness (99.5% in the case of gold). …

[E]ven if …the primary objective of these processes was to provide quality assurance (rather than to increase the metallic purity), the processes nevertheless constituted “refining” in the sense outlined above.

Neal Armstrong. Summaries of ACN 154 520 199 Pty Ltd (in liquidation) v Commissioner of Taxation [2020] FCAFC 190 under ETA Sched. VI, Pt. V, s. 6.3 and s. 123(1) – precious metal.