Huge victory for ATO in gold GST case as $250m assessment against EBS Refining upheld
In one of the most important tax cases in Australia’s history, the Australian Taxation Office has had a $250m assessment against EBS Refining upheld. It’s a huge victory for the ATO.
Unless reversed on appeal, the judgment means the ATO operated within the law in the gold affair.
It also means that the states which have lost around $1bn in GST revenue will find it harder to recoup the money from the Commonwealth.
The ATO said the Administrative Appeals Tribunal (AAT) “has struck down an arrangement to obtain refunds from an artificial gold bullion processing and trading scheme”.
“The Tribunal found that these artificial arrangements dealing in gold were a tax driven scheme,” Deputy Commissioner Will Day said.
“This decision clearly supports the ATO’s work in tackling schemes in the precious metals refining industry aimed at manipulating the GST treatment of gold.”
When Peter Costello set up the GST system for gold around 2000, he followed London’s set of rules, but in 2003 London’s VAT revenue (GST equivalent) was savaged and most countries with a hold refining industry followed London in changing the rules.
Australia did not follow, so around 2011-12 some companies woke up that Australia was opened to be manipulated.
These companies began selling unrefined gold to the refiners who would pay them the market value plus GST. The refiners would then claim the GST back from the ATO as businesses do around Australia.
But the companies, who had bank accounts and ABN numbers disappeared with the GST and then mutilated the gold and with new aliases, sent it back to be refined again so they could take more GST.
The ATO said the Tribunal found that processing the gold in that way was not “refining” for GST purposes.
“The Tribunal found that this particular refiner continued to claim input tax credits with reckless indifference to the GST consequences.”
“This decision sends an important deterrent message that the ATO will act to address this non-compliant behaviour to ensure the integrity of the GST system and providing a level playing field for honest businesses,” Mr Day said.
“This action is important to safeguarding Australia’s tax and super systems,” he said.
The liquidator of EBS, Schon Condon said: “The AAT decision has already been reviewed by our lawyers and counsel and serious errors have been identified which will be the subject of an appeal.”
The judgment from the Administrative Appeals Tribunal was delivered against the liquidators of EBS Refining.
EBS was a shell company because it sold its plant to the Pallion Group backed by Cochineas brothers (Andrew, Paul and Phillip) in a joint a venture with the Simpson/Gregg Family company. Pallion Group includes a number of businesses including ABC Bullion.
