Gold or gold stocks?

[againsthegrain]

What makes you think you won't have to pay tax? they only way you will legally avoid paying tax is if you lose money on you physical gold.

If you buy the gold for more than you sell it for, then you will incur capital gains tax just as you would if you sold Real estate, Stocks, scrap metal, Barrels of oil, bails of hay or anything else you can buy or sell.

You could go running around to all the different exchanges and selling it for below the declarable limit, 2k or 3k? and collect cash on it but its pretty pointless since you will end up with $x cash and you still need to declare where it came from when you put it in the bank and digging yourself deeper.
Every income is taxable in this country if you make money as a sole trader on your abn or sell gold in higher quantity. Money comes to your bank declare, pay cgt and reinvest profits.

 

[againsthegrain]

If you sell Physical Bullion, and can't prove what price you paid for it you may end up having the Total revenue of the transaction added to your taxable income.

For example, if you Sell $10,000 worth of gold the Tax office considers that as $10,000 of income, but if you can prove you paid $8,000 for it they allow you to deduct the $8,000 from the revenue and only add the $2000 profit to your taxable income, but with out the receipt showing you paid $8,000 for it, then there is no deduction, so the entire $10,000 might be added to your taxable income.

I had a feeling its like that, never really looked into it since I keep my receipts on the cloud and on my phone in digital form. wouldn't want to lose them. That's if you get audited I guess

 

[Value Collector]

You could go running around to all the different exchanges and selling it for below the declarable limit, 2k or 3k? and collect cash on it but its pretty pointless since you will end up with $x cash and you still need to declare where it came from when you put it in the bank and digging yourself deeper.
Every income is taxable in this country if you make money as a sole trader on your abn or sell gold in higher quantity. Money comes to your bank declare, pay cgt and reinvest profits.

Yep, or maybe install the gold as a counter top in your primary place of residence, and when you sell the house you won't have to pay capital gains tax on the house , I am not sure that would pass the acid test at the tax office though.

 

[wayneL]

What p1sses me off is that essentially, especially with something like gold (assuming that at its base, it just hedges against inflation over the long term), you are being taxed on the debasement of the currency.

That sucks.

This is why Australians are over the top about the value of ppor, it is the only untaxed hedge against the debasement of our currency.

 

[againsthegrain]

What p1sses me off is that essentially, especially with something like gold (assuming that at its base, it just hedges against inflation over the long term), you are being taxed on the debasement of the currency.

That sucks.

This is why Australians are over the top about the value of ppor, it is the only untaxed hedge against the debasement of our currency.

The stamp duty will hunt you down still

ps interest you acquire on money in the bank also is taxable and that interest is currently lower then inflation

 

[Value Collector]

What p1sses me off is that essentially, especially with something like gold (assuming that at its base, it just hedges against inflation over the long term), you are being taxed on the debasement of the currency.

That sucks.

This is why Australians are over the top about the value of ppor, it is the only untaxed hedge against the debasement of our currency.

You can say the same with every real asset eg, Real estate, Stocks, etc etc some of the capital gains come from inflation over time, but are still taxable.

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What is even worse is that with shares, a large portion of the over all capital gains experienced in the share market comes from after tax earnings retained by the company, so the CGT is in part double taxation.

eg, XYZ company earns $1 pays $0.30 in tax (30%) and retains the remaining $0.70 to grow,... that growth then raises the share price from $10.00 to $10.70.... when you sell that $0.70 "Capital Gain" is then taxed again, even though it's the result of retained earnings that have already ben taxed.

 

[wayneL]

Yes indeed, which is why I made special mention of PPOR.

Assuming that via monetary and fiscal action we will enter a period of high or very high inflation at some point in the near future to inflate away the ridiculous debt, it double sucks.

My suggestion is for folks to consider that in their investment decisions. I certainly will be doing so.

 

[againsthegrain]

Yes indeed, which is why I made special mention of PPOR.

Assuming that via monetary and fiscal action we will enter a period of high or very high inflation at some point in the near future to inflate away the ridiculous debt, it double sucks.

My suggestion is for folks to consider that in their investment decisions. I certainly will be doing so.

I still prefer gold, when it comes to holding a asset vs cash.

Pros
- Easily liquid
- Easy to hide
- Don't have to sell the whole lot at once
Cons
- cgt (like said is there with every asset)
Ppor as a asset against inflation
- Can only have 1
- Not very liquid if you need the $ for opportunity
- Stamp duty when you buy
- Agent fees when you sell
- You still need to buy another one or rent
- High $ at the moment
Pros
- Historically very stable
- Excellent capital preservation if you bought before the boom

But we all have to live somewhere, just wouldn't treat a ppor as a instrument to offset inflation.

Say I see a great opportunity 100k I 100% want it, by the time u sell the ppor it may be gone and you need to move out.
Or simply dig out that 1kg bullion or get it from the vault (whatever) sell it same day done deal

 

[Value Collector]

Yes indeed, which is why I made special mention of PPOR.

Assuming that via monetary and fiscal action we will enter a period of high or very high inflation at some point in the near future to inflate away the ridiculous debt, it double sucks.

My suggestion is for folks to consider that in their investment decisions. I certainly will be doing so.

A benefit with holding a diversified well chosen portfolio of Shares and/or realestate, is that it does provide an inflation hedge in both Income and capital value, while also providing cashflow income.

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That cashflow income is of prime value, in that you can live off that inflation hedged income and delay the CGT event for many years perhaps forever, and so you can choose when to take the inflation tax hit, where as with gold if you eventually decide that you need to buy some bread to sustain your life you must sell some gold and take the CGT hit.

Saying all this though, atleast the 50% CGT discount goes some way to offset the inflation tax and double taxation of retained earnings, So when ever you hear some political party saying they wish to end the CGT discount we need to resist them, unless they limit taxes in other ways such as the USA system where they limit tax on CG and dividends to 15%.

 

[Value Collector]

Say I see a great opportunity 100k I 100% want it, by the time u sell the ppor it may be gone and you need to move out.
Or simply dig out that 1kg bullion or get it from the vault (whatever) sell it same day done deal

You can always borrow against the PPOR to fund other investments, and then use an offset account to store all the tid bits of cash you have lying around to offset the interest.

----------------
That way you have a following

1, A large Tax free inflation Hedged capital asset (your house) this offsets rental payments you normally have to pay with after tax dollars.

2, The liquidity to take any large opportunity you see (the loan)

3, a place to store illiquid bits and pieces of cash (spending money, upcoming tax payments, unearned options premiums etc) offsetting interest at rates more than you would get in a normal bank account,(the offset acccount)

 

[noirua]

I'm not 100% sure of the tax implications of physical. Surely selling gold triggers a CGT event?

It does depend which domain you are liable to pay tax in. Noting NZ, Hong Kong, British Channel Islands and others have no capital gains tax.

You may be required to pay capital gains tax in Australia if your investment grade bullion has a greater value at the time of sale compared to the value at the time of purchase. However, sales of investment grade bullion do not attract GST.

 

[Garpal Gumnut]

The answer as to the treatment of gold bullion profits or losses by investors or traders such as ASF Members is "it depends".

I enclose a google search which showed the most recent informal advice in an ATO Community Forum. I must say partaking in such a forum is a bit like asking a crocodile whether he wants your barramundi or you when cornered at Cahills Crossing on the East Alligator River in the Northern Territory.

I do remember many years ago my accountant going ballistic when I bought gold bar for my super fund. So it must be a fraught subject. I sold it for what I bought it.

Anyway here is the link to what I found when I googled. "ato treatment of gold sales"

ATO Community

community.ato.gov.au

gg

 

[Value Collector]

The answer as to the treatment of gold bullion profits or losses by investors or traders such as ASF Members is "it depends".

I enclose a google search which showed the most recent informal advice in an ATO Community Forum. I must say partaking in such a forum is a bit like asking a crocodile whether he wants your barramundi or you when cornered at Cahills Crossing on the East Alligator River in the Northern Territory.

I do remember many years ago my accountant going ballistic when I bought gold bar for my super fund. So it must be a fraught subject. I sold it for what I bought it.

Anyway here is the link to what I found when I googled. "ato treatment of gold sales"

ATO Community

community.ato.gov.au

gg

So it’s in the same category as shares and realestate eg, you will get the capital gains discount if you are “investing” but no discount if you are “trading”, but either way they want their pound of flesh from an gain you make.

 

[bigdog]

Gold down 4.58% today

 

[againsthegrain]

Gold down 4.58% today

View attachment 114419
View attachment 114418

on vaccine news probably... which is no definitive news

 

[wayneL]

The answer as to the treatment of gold bullion profits or losses by investors or traders such as ASF Members is "it depends".

I enclose a google search which showed the most recent informal advice in an ATO Community Forum. I must say partaking in such a forum is a bit like asking a crocodile whether he wants your barramundi or you when cornered at Cahills Crossing on the East Alligator River in the Northern Territory.

I do remember many years ago my accountant going ballistic when I bought gold bar for my super fund. So it must be a fraught subject. I sold it for what I bought it.

Anyway here is the link to what I found when I googled. "ato treatment of gold sales"

ATO Community

community.ato.gov.au

gg

Here's an interesting question then... I've got coins that I've purchased way back in 1982 and have added a little bit here in there since then, but a little bit more serious buying since 2019.

Lot of those earlier purchases I can't even remember what I bought them for.

How would that work tax-wise, if I flogged a couple of coins here and there?

I don't intend selling any anytime soon, but I suppose at some stage that will be the point.

 

[againsthegrain]

Here's an interesting question then... I've got coins that I've purchased way back in 1982 and have added a little bit here in there since then, but a little bit more serious buying since 2019.

Lot of those earlier purchases I can't even remember what I bought them for.

How would that work tax-wise, if I flogged a couple of coins here and there?

I don't intend selling any anytime soon, but I suppose at some stage that will be the point.

If you sell them for cash then its really upto how honest you are with the taxman, if its a recorded transaction then better ask a good accountant.

ps the broker where I buy gold doesn't require id or any record for buying under 5k cash, not sure about selling because I haven't sold yet but I imagine they would also have similar limits.

 

[Garpal Gumnut]

Here's an interesting question then... I've got coins that I've purchased way back in 1982 and have added a little bit here in there since then, but a little bit more serious buying since 2019.

Lot of those earlier purchases I can't even remember what I bought them for.

How would that work tax-wise, if I flogged a couple of coins here and there?

I don't intend selling any anytime soon, but I suppose at some stage that will be the point.

Kerry Packer says it all.



gg

 

[jbocker]

Here's an interesting question then... I've got coins that I've purchased way back in 1982 and have added a little bit here in there since then, but a little bit more serious buying since 2019.

Lot of those earlier purchases I can't even remember what I bought them for.

How would that work tax-wise, if I flogged a couple of coins here and there?

I don't intend selling any anytime soon, but I suppose at some stage that will be the point.

I wonder if you talk to your tax agent, the earlier purchase appear to be made as a collector hobbyist (your call). Then as you say more seriously purchases (as an Investor?) from 2019. I know 'intent of purchase' is considered and if it is allowable wouldn't try to stretch it too far.

 

[Value Collector]

Here's an interesting question then... I've got coins that I've purchased way back in 1982 and have added a little bit here in there since then, but a little bit more serious buying since 2019.

Lot of those earlier purchases I can't even remember what I bought them for.

How would that work tax-wise, if I flogged a couple of coins here and there?

I don't intend selling any anytime soon, but I suppose at some stage that will be the point.

A loop hole that I believe still exists is the Hobby, you can earn up to $1000 per year from a "Hobby" tax free, if your coin trading was actually part of your "Coin collecting hobby" the first $1000 each year is going to be tax free.

Also, if you are dealing in small amounts, and your transactions are not recorded anywhere who will know, its a bit like people making making a few dollars here and there of scrap metal, if the amounts are small I don't feel they are morally obligated to claim, however if they are making over $1000 per year from it, its probably correct to declare it.