Selling gold in Australia can be a lucrative endeavour, especially with gold prices fluctuating and hitting record highs in recent years. However, before you rush to the nearest gold dealer, it’s essential to understand the tax implications that come with the sale. Whether you’re selling gold jewellery, bullion, or coins, there are a few key things to know about the taxes that might apply.

Does Gold Get Subject to Capital Gains Tax (CGT)?

In Australia, the most relevant tax for individuals selling gold is Capital Gains Tax (CGT). Gold is considered a capital asset for the purposes of CGT, which is a tax on the profit from the sale of an asset. If you sell gold and make a profit, you may be required to pay CGT on that profit.

However, the good news is that CGT applies only to the gain you make, not the entire sale price. For example, if you bought a gold coin for $500 and sell it for $800, your capital gain is $300. This is the amount that will be taxed.

For gold bullion, the tax situation is a bit clearer. Bullion is generally treated as an investment asset. When you sell it for a profit, you’re required to pay CGT. The tax is calculated based on the difference between your purchase price and the selling price.

How Long You’ve Held the Gold Matters

One of the most important factors in determining how much tax you’ll pay on the sale of gold is how long you’ve held it. If you’ve held the gold for more than one year, you might be eligible for a 50% discount on your capital gain. This is part of the Australian government’s effort to encourage long-term investment.

Let’s break it down:

If you sell gold within a year of buying it, you’ll pay tax on 100% of the profit.

If you sell it after holding it for over a year, only 50% of the profit will be taxed, which can significantly reduce the tax bill.

Are There Any Exemptions?

Not all gold sales are taxable, and some exemptions exist. For example, sales of certain types of gold coins, particularly Australian legal tender coins like the Australian Gold Bullion Coin (e.g., the Australian Kangaroo or the Australian Gold Sovereign), may be exempt from CGT under specific circumstances. These exemptions are generally available if the coins are considered “legal tender” and are purchased as part of an investment strategy.

However, gold jewellery is typically subject to CGT, as it’s considered a capital asset. Whether it’s an engagement ring or a gold bracelet, if you make profit selling jewellery, you’ll likely owe tax on that gain.

How to Calculate Your Capital Gains

When calculating your capital gain, it’s crucial to remember that the tax is based on the difference between the sale price and your purchase price. So, if you bought gold jewellery for $1,000 and sold it for $1,500, your capital gain is $500.

You can also subtract any costs associated with buying or selling the gold, such as transaction fees or auction house fees, which can help reduce your taxable gain.

Tax-Free Gold Sales?

CGT is not a concern if you are selling your gold at a loss. Actually, you may be able to lower your overall tax liability by using the loss to compensate for gains from other kinds of capital assets. Many investors employ this tactic to reduce the amount of taxes on their holdings..

On the other hand, if you receive gold as a gift, there’s no tax liability until you sell it. Gold gifts are not considered taxable income.

Reporting Your Sale to the ATO

Any capital gains you make from selling gold must be reported to the Australian Taxation Office (ATO). This includes bullion, coins, and jewellery. You’ll need to report the sale on your annual tax return and calculate the capital gain or loss. If your total taxable gains for the year exceed the CGT discount threshold, you’ll need to pay tax on the gain.

It’s essential to keep records of the original purchase price and the sale price, as well as any associated costs, to ensure accurate reporting.