A4.1 Since 2012, the ATO has been considering the risk of exploitation of the GST rules as they apply to the precious metals industry and in particular gold. The ATO believes it to be the 'largest risk to the GST system.'930

A4.2 The underlying nature of outworkings of the ATO's response is multi-faceted and complex. Therefore, in seeking to provide insight and facilitate understanding, the analysis that follows is not a simple chronology of events. A degree of generalisation is also needed in certain instances, as due regard must be given to the ongoing investigations and litigation to ensure they are not prejudiced in any way. There are also certain confidentiality constraints imposed by the relevant tax, law enforcement, privacy and employment laws that need to be considered regarding disclosures.

Gold and the gold industry

A4.3 Gold is used in the manufacture of collectable goods and industrial processes931 as well as a financial investment in itself, for example, as a hedge against inflation or uncertainty.932 One of the main benchmarks for the price of gold as an investment product933, namely the gold spot price934, had dramatically increased following the global financial crisis in 2009. In 2008, the gold spot price increased from approximately AUD$500 to a peak of over AUD$1,700 in August 2011. Since that peak, the gold spot price has remained in the range of AUD$1,300 to AUD$1,800.935

A4.4 It has suggested that the increase in the gold spot price had attracted many more participants to the gold industry and the current total population is estimated to total between 350-500 entities936, including the following types of businesses:

  • refineries that acquire products containing gold from a number of sources, such as doré937, jewellery and industrial by-products, from which they produce gold for investment purposes or for manufacturing jewellery or industrial use;
  • traders who generally deal in gold markets, including banks and commodity brokers;
  • bullion dealers who typically trade in physical bullion both domestically and internationally; and
  • gold buyers, for example gold kiosks and pawn shops, who obtain gold from public sources such as unwanted jewellery — state based legislation governing dealers of second hand goods require such buyers to obtain a dealer's license.

A4.5 Anyone may buy what is purported to be gold, however, they must rely on others' representations regarding the content and quality of the metal unless they have equipment and expertise to carry out the testing (assay) themselves. Accordingly, the reputation of the gold refiners is an important factor in maintaining investor confidence in the trade of gold.

A4.6 The 'only globally accepted accreditation for the [gold] bullion market' is the accreditation that the London Bullion Market Association (LBMA) may give to refineries that have proven to produce gold bars to a minimum standard.938 Refiners mark gold bars with their distinctive hallmark and investors may confirm whether a refiner has been accredited by the LBMA by consulting the 'London Good Delivery List' that is published on the LBMA's website.939

A4.7 Currently, there are 69 refiners in the world who have LBMA accreditation940 and only two of these are located in Australia.941 It should be noted that from time to time there have been a number of other gold refiners in Australia, however, they have not been LBMA accredited.942

GST treatment of gold transactions

A4.8 Gold in non-investment form, for example jewellery943, is treated according to the basic rules of the GST law. These basic rules classify supplies of such gold as taxable supplies944 which would require GST registered suppliers to charge GST on these supplies. As a result, GST registered entities who acquire the gold would be entitled to claim input tax credits (ITCs) for the embedded GST where they hold a valid tax invoice945 and the acquisition was for a creditable purpose946.

A4.9 There are special rules for the GST treatment of gold in investment form. The term, 'investment form', is not defined in the GST legislation, however, the explanatory memorandum to the bill that introduced that term states:

…investment form means precious metal sold in a wafer, bar or other tradable form (i.e. bullion) which has an internationally accepted hallmark. In the case of gold, this means a hallmark that has been approved by the London Bullion market and means that the gold can be traded on the international Bullion market.947

A4.10 The price of gold itself is effectively fixed by the gold spot price which would prevent dealers from passing on the GST in their sales. For this reason, there are special GST rules for gold, in an investment form, to ensure that there is no GST embedded in the price of gold supplies. Accordingly, the GST laws will treat a supply of gold as GST-free if:

  • the gold is a 'precious metal', which is defined as including gold with a fineness of at least 99.95 per cent and 'in an investment form'948;
  • it is the first supply after refinement; and
  • the recipient is a dealer of precious metals.

A4.11 Subsequent supplies of gold are input taxed as they are a form of investment similar to shares and are treated as a form of financial supply.949 As a result, no GST is to be remitted to the ATO and no ITCs may be claimed with respect to the acquisition of gold in 'investment form'.950

A4.12 ITCs may be claimed on the acquisition of second hand goods from non-GST registered entities where the goods were purchased for resale.951 The entitlement to claim these ITCs avoids any double-taxing of GST that is already embedded in the goods. The definition of second hand goods, however, explicitly excludes precious metals or goods to the extent that they would be precious metals if they had been of the required fineness. As the definition of precious metals is that the metal be in investment form, resold gold which is not in investment form could be considered as a second hand good. Accordingly a second hand goods dealer who had acquired gold which was not in investment form could claim ITCs on the purchase of that gold.

A4.13 The above mentioned GST provisions are referred to as the GST rules for gold in the discussions below. A summary of these provisions is provided in Figure D1 below.

Figure D1: GST rules for gold

Source: ATO

Prior international experience with exploitation of value added tax rules for gold (1954–1998)

A4.14 Arrangements which seek to exploit the different taxation treatment of gold in value added tax (VAT) systems, such as the GST, are not new. For example, the European Commission proposed an anti-fraud measure in 1992 that would allow Member States to require purchasers of investment gold to pay relevant VAT (a 'reverse charge' which is explained in detail further below).952 This proposal was subsequently adopted by the European Union Council as a Directive to Member States in 1998.953

A4.15 New Zealand was also alive to risks, of the exploitation mentioned above, when it implemented the GST in 1986 which had addressed the risks by preventing input tax deductions being claimed for gold, including the gold component in second hand goods954 by defining it according to the metal's purity.955 Other countries with a VAT system, have also sought to address such risks.956 A summary table showing the comparative approaches adopted by the UK, Canada, New Zealand, Singapore, Malaysia, Germany and South Africa jurisdictions is reproduced in Appendix 4 of the IGT's review into GST Refunds.957

Law design and initial interpretation of GST rules for gold (1999–2012)

A4.16 At the time of developing the GST regime in Australia958, the ATO had the benefit of observing the experience in other jurisdictions, most notably the UK and New Zealand. The proposed GST law which was originally introduced into Parliament had adopted a similar approach to that of New Zealand by preventing ITCs from being claimed for precious metals based on the purity of the metal. For example, the proposed definition of 'precious metals' included 'gold (in any form) of at least 99.5% fineness.'

A4.17 At the time the GST law was drafted, there was pressure to draft the volume of the GST law within short timeframes.959 Government had sequestered the drafters and required authorisation to be obtained for any consultation with industry.960 When the relevant proposed legislation was tabled in Parliament, Government authorised consultation with industry as concerns were raised with the proposed law as it applied to precious metals.961 As a result, amendments were introduced into the House of Representatives to replace the term '(in any form)' with '(in an investment form)'.962 The basis for this change was that the originally proposed definition 'did not reflect the way precious metals is mined and supplied in Australia'. In particular, it was considered that the original proposal would unnecessarily limit a GST-free supply to transactions in which dealers had acquired the precious metal for investment purposes.963 The Explanatory Memorandum which accompanied the amended definition stated that:

… investment form means precious metal sold in … tradeable form which has an internationally accepted hallmark. In the case of gold, this means a hallmark that has been approved by the LBMA and means that the gold can be traded on the international bullion market.964

A4.18 According to some of the participants who worked on the design of the GST law at the time, the frauds that other jurisdictions had experienced had arisen from factors which were idiosyncratic to their jurisdiction.965 The drafters also considered that a GST general anti-avoidance rule (GAAR)966 would operate to address such frauds, unlike other overseas jurisdictions which did not have such a rule. Accordingly, the proposed amendments were adopted and became law, effective from 1 June 2000.

A4.19 Later, in November 2002, a case arose in which the ATO was of the view that gold in investment form has a GST-free status after each refinement of the metal as the word 'refinement' in the law was not limited to the first refinement which had transformed ore into gold.967 In addition, the ATO responded to calls to provide a public view on the terms, precious metals and investment form.968 As a result, the ATO issued a public ruling, Goods and Services Tax Ruling 2003/10 (GSTR 2003/10), which provided a more expansive application than that indicated by the Explanatory Memorandum — the public ruling allowed 'in investment form' to include gold with an accredited hallmark that was accepted in the Australian market.969 Over 2011 and 2012, the ATO also issued approximately 12 private rulings on the application of definition of 'second hand goods' as it applied to jewellery. The ATO issued these private rulings on the basis that 'it was not Parliament's intent to allow jewellery to fall within the definition of second hand goods for the purposes of Division 66'.970

Opportunities to exploit the GST rules for gold

A4.20 More recently, the ATO has identified that the GST rules for gold has created significant exploitation opportunities as gold is a high value asset and its form may be easily altered.971

The high value of gold provides significant opportunity for exploitation, particularly in organised networks, both registered and unregistered. The behaviour ranges from simple and opportunistic (individuals and entities operating independently) to elaborate schemes, principally carousel type arrangements, whereby established syndicates acquire bullion and alter the form (melting or defacing) and resupply the altered precious metals for refining.972

A4.21 An example of the above exploitation opportunity is 'asset flipping' in which participants obtain profit from the difference in GST rates and without any fluctuation in the gold spot price. In an asset flipping arrangement, the GST treatment of gold is 'flipped' from an input taxed supply to a taxable supply and then to a GST-free supply when it is refined back into investment form and sold. The gold is then flipped back to an input taxed supply in subsequent sales and the circular series of actions involving refiners, dealers and suppliers starts again (a 'carousel'). In such carousel arrangements, however, there may be innocent and unwitting participants in the circular supply chain. A taxpayer may have no knowledge of the source from which another entity had acquired the gold, may have undertaken enquiries of the other entity in accordance with industry practice and may have conducted dealings at arm's-length.

A4.22 In a more egregious form, asset flipping may involve traders in the supply chain who charge GST on the supply but do not remit it or report it to the ATO (missing traders), whereas the purchaser may claim the corresponding ITCs from the ATO. A more fulsome description of carousel and missing trader fraud is provided in the IGT's report, GST Refunds.973

A4.23 Another opportunity to exploit the GST rules for gold does not need complex arrangements and may be conducted by using recipient created tax invoices which misrepresent the nature of the goods as second hand and the timing of the transfer of the title to the gold. For example, an entity may claim that before they purchased gold in investment form, they had conducted an internal composition test, such as drilling through the gold, to check the metal's quality before agreeing to the purchase. Entities may explain repeated instances of such transactions due to the comparatively higher margins they have offered to attract business.

A4.24 A further exploitation opportunity arises when GST refunds may be claimed on the export of gold which has in fact been diluted, for example, by adding inferior alloys. This allows some of the gold to be extracted and recirculated into the domestic market. To detect such arrangements and to identify artificial assay results and transaction splitting, forensic analysis and industry expertise is required.

A4.25 It should also be noted that it is well known in law enforcement circles that gold is a form of currency amongst organised crime syndicates and that unexplained trade in large amounts of gold bullion or granules may indicate an organised crime syndicate's efforts to launder money.974 Furthermore, they may be attracted by the profits from exploiting weaknesses in the GST rules for gold as there is a known low risk of detection and weak enforcement measures to deal with non-compliance.975

Signals of exploitation of GST rules for gold (2000–2012)

A4.26 The ATO first became aware of the exploitation of the GST rules for gold in May 2012. It is difficult to determine the exact time when a significant risk to revenue arose due to the total population of the gold industry not being known by the ATO. However, the data reported to the ATO by recognised gold refiners in their BASs can provide an indication as refiners perform a role in refining scrap gold into investment form. Figure D2 below represents a retrospective analysis of the total annual net GST refunds paid to eight refiners from 2000–01 to 2015–16.

Figure D2 – Total net GST paid to eight refiners, by financial year

Source: IGT, based on ATO data

A4.27 As Figure D2 shows, prior to 2011–12, the refiners were, on aggregate, net payers of GST and after that financial year the refiners became net receivers of GST refunds. Also, the total amount of net GST that was paid to refiners rose significantly in the 2012–13 year and peaked in 2013–14. After this peak, the total amount of net GST paid decreased substantially over the 2014–15 and 2015–16 financial years.

A4.28 From 2000 to 2013, the ATO had processes to detect broader risks in GST refund claims but did not have a specific process to risk-assess or monitor claims in the gold industry:

…no specific refund integrity processes targeting the precious metals industry were employed by the ATO, as refund claims by industry participants would have been risk assessed by the General GST refund risk models in operation at the time. These models included the Risk Rating Engine (RRE), which incorporates a number of business rules that it high-risk refunds such as low value claims, unusual refunds, and claims from new businesses.

In addition to the RRE, suspect refund models (post-2009) specifically targeted fraudulent refunds, as such, high risk refund claims for the precious metals industry would have been subject to business as usual (BAU) verification checks by these processes at that time... 976

A4.29 However, in 2013, the ATO became aware that, since 2010, its RRE and suspect refund models had not detected some large claims made by entities in the gold industry.

A4.30 There were also external signals, such as a media article published on 10 June 2011 which reported an alleged CAD$150 million asset flipping fraud in the Canadian gold industry.977

ATO's gold bullion project (May 2012 – May 2013)

A4.31 In May 2012, the CACT978 had identified information which indicated that two companies in the gold industry had been party to suspicious purchases and sales of gold over an eight month period. These transactions involved approximately $18.7 million of GST which had not been remitted to the ATO.979

A4.32 The CACT referred this information to the ATO's ITX business line who immediately commenced analysis of that information and conducted initial enquiries regarding the activities of the relevant taxpayers with a view to commencing audits.980 However, shortly after the start of ITX's enquiries, the two companies were put into liquidation and the director left the country permanently.981 The ATO was also not made aware of creditors' meetings for these two companies before they were put into liquidation. The ATO later discovered that any dividend was unlikely to be forthcoming.982 Accordingly, the ITX business line cancelled its plans to commence audits983 and engaged its profilers to deepen their understanding of the risks.

A4.33 The analysis soon identified a third company which was continuing to conduct business in the gold industry. The ITX business line commenced an audit into this company in July 2012. The audit was finalised in December 2012, however, the audit had uncovered little evidence of how the transactions were carried out. As a result, the ITX business line focused on technical arguments regarding the GST refund claims, namely that the company had misclassified taxable supplies as GST-free, claimed input tax credits on input taxed supplies and claimed ITCs on second hand goods which did not meet the statutory definition. 984 On this basis, the ATO had issued GST assessments to the company, including penalties for recklessness.985

A4.34 During the period over which the above audit was conducted, there were a number of relevant developments. First, the ITX business line had become aware of a CRA newsletter which had reported a typology of asset flipping. The typology was that of a scheme which had recently been detected in Canada and the identified behaviours appeared similar to those observed by the ITX business line in their profiling and audit work.986

A4.35 Second, the ITX profilers had commenced more detailed and wide-ranging profiling and analysis to understand the scope of the arrangement and links to other taxpayers. When the ITX profilers had concluded their analysis in December 2012, they had identified that the two liquidated companies had made a profit by not remitting the charged GST to the ATO. The ITCs which had corresponded to the GST charged by the two liquidated companies, however, was not claimed by the purchasers. The profilers had also identified that, with the benefit of hindsight, an additional $59.85 million of GST refunds had been paid by the ATO for GST that had not been remitted to the ATO by five other companies over the 2010–2012 period. The ATO's suspect refund models had not stopped these refunds before they were paid.987

A4.36 The ITX profilers believed that some of the companies and related individuals were connected and acting together in the arrangement, either in full knowledge that the missing trader would not remit the GST to the ATO or by willfully ignoring suspicious transactions. The profiling work had also uncovered that one of the people connected to this suspected syndicate was known to law enforcement agencies.988

A4.37 The information and behaviours which had been identified by the profilers and audit teams prompted the ITX business line to conduct a broader scan of information in March 2013 as it was 'unknown how prevalent this type of behaviour [was] within the gold trading industry and what … risks were involved.'989

ATO's Operation Nosean (May 2013 – June 2015)

A4.38 On 2 May 2013, the CACT made another referral to the ATO—this time to the former SNC business line990 (hereinafter referred to as the PGH business line991) suggesting four groups that may be exploiting the GST rules for gold.992 As a result, the ATO started Operation Nosean.993

Compliance strategy (May 2013 – October 2013)

A4.39 Soon after the above referral994, the ITX and PGH business lines agreed on a strategy to address the identified risks with respect to four potential syndicates.995 This strategy involved a combination of audits as well as the development of technical arguments.996 If such audits surfaced criminal conduct, the matters would be referred to PGH investigators who would commence criminal investigations. However, any cross-agency support would only be sought after the ATO's technical position had been developed and sufficient evidence obtained. This strategy appeared to be based on a view that the risk was localised to the identified transactions and activities of the four suspected syndicates.997 The PGH and ITX Executives were briefed, activities were commenced and the two business lines met twice during June 2013 regarding the progress of the activities.998

A4.40During ITX's intelligence gathering activities999, however, it was observed that there were numerous entities operating in 'gold supply chains' with missing traders. These entities had also experienced significant recent growth in turnover and a rapid increase in GST refund claims. For example, in one business there was a ten-fold increase in turnover in one financial year. The ITX business line had also observed different arrangements which exploited the GST rules for gold, including a missing trader typology with gold passing through four to five layers of entities, asset flipping, significant discrepancies between BAS and Customs forms regarding gold quantities and misclassification of supplies.1000

A4.41 Accordingly, the ITX business line started to monitor the data reported by gold industry entities in their BASs. The ITX business line also requested other ATO teams to provide information and insights regarding the gold bullion and precious metal trading industries. In this request, the ITX business line noted that it was possible that others in the gold industry may be 'complicit by conspiring or choosing to ignore the fraudulent actions of others' and that this possibility appeared to be supported by some of the TERs that the ATO had received from the community.1001 Importantly, this ITX request appears to have been prompted by a concern that the risk was increasing significantly:

The observations … indicate that significant revenue is potentially risk with tax evasion in the gold bullion and precious metal sectors. Recent open source reporting indicates an increased trend in the volumes and value of gold bullion trading from 2012. The operation of a number of [Groups] carrying out serious evasion in this sector could, if untreated, resulting in a rapid growth in serious evasion behaviour and subsequent increase risk to GST revenue.1002

A4.42 The ATO commenced a risk assessment of the gold bullion industry in July 2013.1003 One of the issues considered was whether the increase in turnover was due to commercial factors, such as increased demand in gold following the global financial crisis.1004 However, the ATO's enquiries suggested that such an explanation did not explain the total increase. Furthermore, the public opinions of some gold industry participants cast doubt concerning the commercial explanation for the increased turnover:

One industry source said there simply isn't enough privately held gold in Australia to account for the volumes being traded, suggesting the same gold was being sold over and over again. Even if you melted down all the jewellery and fillings in the country there wouldn't be enough to cover the quantities involved…1005

A4.43 By September 2013, concerns were raised within the ATO regarding the effectiveness of its strategy to appropriately protect the revenue from risk.1006 It was considered that the ambiguity of the relevant GST laws had allowed suspicious arrangements to be structured in a way that gave them an appearance of authenticity.1007 As a result, it was recommended that a change in approach was needed including:

  • seeking assistance from law enforcement agencies;
  • conducting data matching to better identify the risk population; and
  • addressing the weaknesses in the law that were being exploited.1008

A4.44 As a result, a criminal investigation was commenced and cross-agency support was sought.1009

Search warrants executed (October 2013)

A4.45 On 29 October 2013, Operation Nosean became publicly known when the AFP executed 16 search warrants on gold industry entities that were thought to be connected with two of the four groups. At the same time, the ATO had issued amended GST assessments of approximately $130.7 million including penalties and interest.1010

A4.46 The ATO observed that the search warrants had an immediate impact on the behaviour of some gold industry entities as there was a substantial decrease in the amount of ITCs that were claimed in BASs lodged.1011 For some entities in the gold industry, GST refund claims had decreased more than 90 per cent from that claimed in September 2013. Also, the total amount of GST refunds claimed by recognised refiners' in this period had halved.1012

A4.47 The above decreases, however, do not, of themselves, indicate that these entities had engaged in any illegal activity as they may have been an innocent and unwitting party to subsequent transactions in the broader chain of transactions. In any event, the impact of the search warrants was short lived as the total amount of GST refund claims began to increase again from January 2014.1013

Criminal investigations (from November 2013)

A4.48 In November 2013, the PGH business line also commenced a criminal investigation into entities in one of the groups1014 with a view to referring briefs of evidence to the CDPP for prosecution.1015 On 1 April 2015, a cross agency workshop1016 was held following which the brief of evidence was referred to the CDPP1017 recommending charges be brought against the entities for conspiracy to defraud the Commonwealth and dealing with the proceeds of crime. The CDPP accepted the brief. However, fifteen months later in July 2016, the CDPP asked the ATO to undertake additional work, including forensic accounting analysis.1018 This work continued until early 2018 when two people were charged and they are due to appear in court on 4 September 2018.1019

A4.49 Due to resource constraints1020, the ATO delayed the commencement of a further criminal investigation until January 2015.1021 On 10 May 2016, a cross-agency Gold Bullion Prosecution Workshop was held to discuss the investigation's progress on this group1022 and six months later the ATO made a formal referral to the SFCT to investigate the gold fraud which was later accepted for investigation and treatment.1023 It was agreed that PGH investigators would conduct the investigation together with seconded AFP officers.1024 In February 2017, the ATO hosted an intra-agency workshop with representatives from the ATO's ITX and PGH business lines, AFP, AUSTRAC, ASIC, ACIC and the CDPP to consider and discuss a draft investigation plan for the referral.1025 Importantly, this meeting involved the CDPP which would assist in addressing issues early in the investigatory process rather than addressing the issues after the brief of evidence had been prepared and sent to the CDPP. The SFCT Treatment forum reviewed this investigation in October 2017 and endorsed a recommendation to close this operation.1026

A4.50 No criminal investigation has been commenced with respect to the other two groups.

Cross-agency work (May 2013 – March 2015)

A4.51 Meetings between the ATO, CACT, AFP and ACC have been held on a periodic basis. It has been an important forum to discuss operational issues. In mid-June 2014, a third cross-agency workshop was held between the relevant areas of agencies involved, including AFP investigatory staff, CACT staff, ACC investigators as well as relevant ATO officers including ITX objections officers, ITX auditors, PGH auditors, PGH investigators and Tax Counsel Network (TCN) officers.1027 At this workshop, progress on the ITX audit, PGH prosecution and CACT's Proceeds of Crime work on three Groups were discussed.

A4.52 Cross-agency cooperation and contribution was seen as important to Operation Nosean's success and the identified treatment strategies were seen as 'a model for the future'. For example, the search warrants that had been executed in October 2013 had effectively shut down two of the groups' GST refund claims. Notwithstanding these observations, however, there were emerging groups that appeared to be 'moving large sums of cash'. The strategies remained the same as before, i.e. the ITX business line's audits and PGH's criminal investigation continued.1028

A4.53 The interagency meetings also provided opportunity for participants to discuss how each agency's contribution could be utilised and coordinated. Also, discussed were how delays and difficulties experienced by one party was affecting others.1029

Interpretative issues (January 2013 – January 2015)

A4.54 Interpretative issues had begun to surface soon after the conclusion of the initial audit in December 2012. For example, in that audit the taxpayer's representative subsequently pointed out to the ATO that the auditor's view on the second hand goods issue was contrary to that which had been provided in previous private rulings issued to other entities. Accordingly, in June 2013, the ITX business line had engaged its technical area, Central Technical Support, to obtain the ATO view on two main interpretative issues of concern.1030 The first issue concerned the tax treatment of gold in investment form which had been refined from scrap gold. The issue was whether the sale of that gold was the first sale and if so, was it a GST-free supply. The second issue was whether entities were entitled to claim ITCs for the gold component of second hand jewellery1031 that was acquired.1032

A4.55 The views taken on the above two issues were important to resolve as they were intended to form the technical basis for an ITX compliance strategy which would retain GST refunds due to gold refiners. Previously, there were no specific internal controls to address the exploitation of the GST rules for gold, apart from the ATO's usual compliance activities1033 and retention of refunds appeared to be more appropriate than targeting missing traders after refunds had been issued.

A4.56 In October 2013, there was an escalation to the Special Tech Projects (STP) unit in the ITX business line to confirm the ATO view on the above issues. The STP unit confirmed that the view would support the refund retention strategy. As a result, the ITX business line began retaining refiners' GST refunds in November 2013.1034

A4.57 The ITX's retention strategy, however, was stopped by TCN's November 2013 advice, overturning the advice of STP.1035 The ITX business line understood that TCN would review GSTR 2003/10.1036 However, later events indicated that this understanding was not shared by TCN.

A4.58 Notwithstanding the above TCN action, the ITX business line continued to identify and assess the system's vulnerabilities. It progressed work to clarify the technical issues by researching the application of the legislative framework. New Zealand's jurisdictional framework was also compared to that of Australia's, with a focus on assessing the impact that the term 'in an investment form' had on the definition of precious metals.

A4.59 A number of ITX audits had raised additional technical issues.1037 As a result, the ITX business line approached TCN on 24 February 2014 for clarification of TCN's November 2013 advice.1038 This clarification was provided seven months later in September 2014.1039

A4.60 In the meantime, during May 2014, TCN released a discussion paper which considered the potential law reform options to mitigate the identified risks1040, including amendment of the definitions of 'refining'1041 and 'second hand goods'1042. These options were intended to be canvassed with Department of Treasury and, to do so, the support of an ATO internal Law Advisory Working Group (LAWG) was needed.1043 The ITX business line had begun to seek such support on 30 May 2014, however, it was decided that any such work should await TCN's agreement to review GSTR 2003/10.1044

A4.61 TCN provided advice to the ITX business line on some issues on 24 July 2014. The ITX business line, then, requested advice on the other issues and TCN provided such advice on February 2015.

A4.62 In reflecting on the events, the ITX business line observed that the inability to quickly resolve the technical ambiguities limited the ATO's ability to progress audits and address the identified behaviours of concern:

At this stage, the ATO view remained unclear with preliminary audits and further compliance activities deemed to be on hold until an ATO view could be established, particularly for cases impacted by Div 66 Second Hand Goods provisions. Additionally, it was evident that the risk was systemic across the industry (sample of [ITX] initiated test cases e.g. exporters, buyers and second hand goods were progressed through audit). ITX … had progressed the targeted compliance activities which demonstrated that the core provisions limited the Commissioner's ability to treat the behaviour.1045

A4.63 During the last half of 2014, the ITX business line informally approached Treasury with its concerns. However, it was understood that a request for law change may not be supported at that time. The ITX business line then considered alternatives to law reform, for example an industry voluntary code of compliance1046 and decided that a streamlined audit strategy would be the most effective alternative. However, greater clarity on the scope and types of non-compliance was needed.

Risk assessment of industry population (March 2013 – March 2015)

A4.64 As mentioned earlier, the ITX business line had commenced an information scan in March 2013. By November 2013, the key intelligence needs were specified which included determining the total number of gold industry entities, the portion involved in identified behaviours of concern and quantifying the potential revenue loss.1047 Based on the information available to them at this time, the risk in the gold industry was estimated to total approximately $300 million.1048

A4.65 In mid-June 2014, the ITX business line initiated steps to acquire a dataset which could assist in obtaining the above information.1049 By January 2015, the ATO had obtained the first half of such a dataset.1050 It revealed that the number of entities suspected of exploiting the GST rules for gold was 'larger than first expected'.1051 This had indicated a 'need to ensure an industry response … to prevent proliferation in real time…'1052 In March 2015, the second half of the dataset was received.

A4.66 Based on the above full datasets as well as the ATO's understanding of the risks and observations of the behaviours of concern, the ITX business line had estimated that the total amount of GST at risk could be more than $2.45 billion — a total which was made up of an estimated $850 million which had not been remitted to the ATO and an estimated additional $1.609 billion of GST over the next three and a quarter years.1053

A4.67 Based on the above information, the ITX business line formed the view that taking compliance action against the suspected entities would be ineffective in addressing the risks:

Compliance activity, including cross agency investigations and proceeds of crime action can only treat the symptoms and not the cause. Consequently priority focus needs to be applied to addressing the underlying legislative provisions.

…GST refund fraud associated with precious metal trading remains an ongoing problem as the inherent vulnerability with the GST system in this gold market means that compliance activity cannot effectively treat the risk [, and due to the] relative ease at which the fraud can be undertaken may make it an increasingly attractive proposition for organised crime and other fraudsters.1054

A4.68 The Commissioner was briefed1055 and the ATO later referred Operation Nosean to the AFP in June 2015 for further consideration.1056

ATO's Gold Project (March 2015 – August 2016)

A4.69 In July 2015, the ITX business line commenced the Gold Project with a 'more holistic approach to the risk treatment and reduced audit timeframes'.1057

Audit case work

A4.70 The Gold Project was subject to the direct oversight of an ITX Assistant Commissioner and involved key stakeholders from other business lines including RDR, TCN, Debt and PGH.1058 In addition to the ITX business line's usual audit case call-overs, other case discussions were held particularly where refunds were retained or understanding of supply chain topologies would have benefited from input from other auditors and technical experts, for example, those in the TCN, Case and Technical Leadership, and Debt areas.1059

A4.71 The Gold Project required more resources. It was estimated that, without increased resources, only $147 million in revenue would be recovered and $314 million in revenue leakage would be prevented. With additional resources it was expected that a further $700 million in GST would be recovered and $1.295 billion in revenue leakage would be prevented.1060

A4.72 The ITX business line reassigned officers to the Gold Project from other areas of the ATO and aimed to increase personnel from 33 officers in March 2015 to 48 officers in the 2014–15 financial year and to 57 in the 2015–16 financial year. The largest intended increases in personnel were directed towards the review and audit functions. However, it was forecast that ITX staff would reduce to 10 FTE in the 2016–17 year.1061

A4.73 During these ATO audits, it was discovered that a number of entities had links to suspected organised crime groups.1062

Using the GAAR (June 2014 – August 2016)

A4.74 The GAAR was initially applied to an entity in June 20141063 after the ATO was unable to obtain evidence to support its view that ITCs were not allowed to be claimed as the gold was input taxed.1064 However, it was noted that there were difficulties in applying the GAAR due to insufficient information on how the arrangements were carried out.

A4.75 Following a concerted ATO information gathering effort, preliminary advice was obtained from the Chair of the GAAR Panel1065 which had provided further clarification to the ATO team as to the arguments that were to be put to the entities.1066 Advice was also obtained from TCN in September 20141067 on the GAAR in this case1068 and the case was presented to the GAAR Panel in February 2016.1069 After considering the entities' views, the GAAR Panel concluded that it was reasonable to apply the GAAR1070 and assessments were issued to the relevant entities in April 2016.1071 In response, the relevant entities lodged objections. A different ATO technical team considered the objections and, in September 2016, the ATO disallowed them.1072 Some entities went into liquidation and some sought further review including review of the GAAR assessments.1073

A4.76 The GAAR was applied in another case in August 2016 and the relevant entity also went into liquidation. A third case was identified in February 2017 and the ATO considered the application of the GAAR in other cases in 2018.1074

A4.77 On reflection, the ATO observed:

The anti-avoidance provisions may prove effective [to prevent revenue leakage] in some instances; however, this requires significant investment of time to address the complexities of Division 165, with unknown prospects of success in potential litigation, after the fact.1075

Focus on law reform (March 2015 – August 2016)

A4.78 The need to address the weakness in the law became a priority focus from March 2015 and the ITX business line resubmitted their request to TCN to clarify their advice.1076 The LAWG was also reconvened for the purpose of seeking policy advice from Treasury and the focus became seeking law reform.1077

A4.79 Treasury were informally advised of the ATO's concerns.1078 A briefing was also provided to representatives from the States and Territories as they are the recipients of GST revenue1079 even though it is collected by the Commonwealth.1080

A4.80 In preparation for the ATO's formal approach to Treasury1081, TCN provided clarification of the ATO's view1082 and the ATO's Revenue Analysis Branch was also asked 'to provide the most accurate population and potential figure including providing consideration of potential proliferation if risk is left untreated'.1083 The LAWG was also tasked with developing a response to Treasury's request for advice regarding a related matter.1084 This response was provided on 18 November 2015.

A4.81 The ATO had also consulted with their counterparts in selected overseas jurisdictions, namely the UK's HMRC, the CRA, New Zealand's IRD and the Inland Revenue Authority of Singapore on the options for legislative and administrative reform to improve compliance.1085

A4.82 In addition to the earlier request for advice, on 20 January 2016, the ATO formally alerted Treasury1086 to its concerns with the exploitation it had observed regarding the GST rules for gold, the ineffectiveness of compliance actions and that it was considering options to reduce the prevalence of non-compliance.1087

A4.83 The ATO then developed options to address the issues and by April 2016, it had produced an Options Paper (April 2016 Options Paper) which identified 12 options. One of the options was to implement a 'recipient GST remittance' system which would require a purchaser to remit any GST on an acquisition of any good containing precious metals and allow those recipients to claim input tax credits (a reverse charge). As these two amounts would generally offset one another, requiring a purchaser to retain the GST would reduce the risk of unremitted GST and missing trader fraud. However, such a requirement would also increase compliance costs for some in the industry and would not address the issues arising from the misrepresentation of second hand goods.1088 It should be noted that a reverse charge had been suggested by an external representative in January 2014 and again in December 2014.

A4.84 One of the other options proposed was to change the law to limit the 'in an investment form' requirement to GST-free supplies and input tax all supplies of precious metal 'in any form'. Such a change would still allow ITCs to be claimed on lower grade precious metals in second hand goods, such as jewellery.1089

A4.85 In August 2016, the ATO provided its formal advice on the issues and the options for Government's consideration.1090

ATO's Precious Metals Project (September 2016 – April 2017)

A4.86 The total GST refund claims by the seven main gold refiners rose from $3 million per month in January 20161091 to $14 million per month in August 2016.1092 As a result, the ATO refocused its streamlined audit strategy to 'holistically mitigate the ATO's revenue risk and seek to change the behaviour identified within the precious metals risk population.'1093 This new phase was called the Precious Metals Project (PMP).

A4.87 The PMP was led by the ITX business line and aimed to integrate compliance activity, debt action, advice to industry, reform to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), engagement with the SFCT and referrals for prosecution.1094

A4.88 The PMP was directly overseen by an SES Band 2 officer Steering Committee which had enabled the ATO to marshal resources across the agency, initiate interagency assistance and respond quickly to non-routine issues.1095 For example, the Steering Committee assisted by allowing ATO officers to quickly engage and brief external Counsel on the retention strategy and allocated resources to issue a draft GST determination in February 2017. In monitoring progress on criminal investigations, it approved the scope of briefs of evidence and interagency workshops on investigatory matters as well as ensured that debt action activity was monitored.1096

Refiner retention strategy

A4.89 A key strategy of the PMP was to review and, where applicable, retain the monthly GST refunds1097 of gold refiners1098, subject to verification.1099 This strategy was implemented in September 20161100 and led to considerable litigation, including objections to the retention decisions. Such litigation was conducted in addition to appeals to the AAT and Federal Court regarding ATO assessments of tax and judicial review of ATO decisions.1101

A4.90 In February 2017, the AAT upheld the Commissioner's assessment, in one of the above cases, to disallow claimed ITCs as, amongst other grounds, the entity did not adduce sufficient evidence to support its contentions regarding the transactions.1102

A4.91 According to a media article, the above refund retention strategy had significant impact on the working capital of the refiners and some retrenched staff.1103 Parallels were also drawn with a 2006 European Court of Justice decision which reversed HMRC's decision to retain VAT refunds of taxpayers who were unknowingly part of a supply chain in which transactions were vitiated by VAT fraud.1104 The ATO's GST refunds verification processes are explored in more detail in the IGT's GST Refunds review.1105

A4.92 In the first month of the PMP, the ATO observed that the aggregate GST refunds for the refiners had dropped from $14 million in August 2016 to $3.5 million in September 2016. By December 2016, the aggregated refund amount had dropped further to $332,000.1106 The ATO observed that the strategy appeared to reduce the volume of scrap gold to that which was transacted in 20111107 and believed that this reduction 'directly supported the ATO's assertion that the scheme perpetuated by the risk population has created an artificial and contrived scrap gold market'.1108

A4.93 The ITX business line, however, continued to monitor the relevant supply chains to identify whether they would extract GST refunds through other means. As a result, the ATO identified that they may have been exporting scrap gold to obtain GST refunds as well as selling the gold offshore. It was suspected that, in the latter case, the gold was then repatriated to Australia as GST-free investment form gold, which was then recirculated through the supply chains.1109

Voluntary reverse charge

A4.94 In December 2016, the ATO sent a letter to 60 of the entities under ATO review1110 to make an offer regarding future GST refunds. The letter explained that by adopting a voluntary reverse charge approach, their GST refund claims would be processed faster as it would lessen the chance of ATO enquiries and they would not need to collect the GST on the sale. 1111 The letter was sent to the remaining entities in the risk population in January 2017.1112 The ATO knew, however, that the voluntary reverse charge would only be effective if every entity in a supply chain adopted this approach.1113

A4.95 The voluntary charge was implemented in January 2017 following industry consultation.1114 However, only a small proportion of the gold industry participated in the voluntary reverse charge initiative.1115 The ATO was still of the view that legislative change was needed to overcome this issue. 1116

Legislative amendments (March 2017)

A4.96 On 31 March 2017, the Assistant Treasurer publicly announced the Government's intention to enact law to address the exploitation of the GST rules for gold. Broadly, a mandatory reverse charge for business to business purchases of precious metals would be introduced and the definition of 'second hand goods' would be amended to exclude any goods containing precious metals unless they were jewellery or a collectable. These amendments would be intended to apply from 1 April 2017. 1117

A4.97 On 1 June 2017, the proposed legislative amendments were introduced into Parliament.1118 They received Royal Assent on 26 June 2017 with legal effect from 1 April 2017.

A4.98 In the most recent information available, the turnover of gold within the risk population in June 2017 had reduced to $141 million as a result of the refund retention strategy and the legislative reverse charge. The ATO had also conducted a total of 221 cases resulting in GST and income tax assessments totaling $879 million of which $55 million was collected. As at October 2017, there were 87 cases on hand which were estimated to involve a further $50 million in liabilities and eight cases were awaiting hearing in the AAT.1119

Observation on the ATO undertakings

A4.99 Figure D3 below tracks the gold turnover for the risk population between July 2010 and January 2017. Key events are also identified.

Figure D3: Gold turnover within the risk population

Sources: ATO and other1120

A4.100 As illustrated in Figure D3, the gold turnover of the risk population did not total more than $50 million before July 2012. The amount increased to more than $200 million in July 2013, before dipping in November 2013 to less than $30 million. From January 2014, the amount increased progressively and reached the peak in August 2016 of more than $275 million before dipping once more to below $150 million over the September 2016 to January 2017 period inclusive.

A4.101 In reflecting on the difficulties that were faced in addressing the risk presented by the exploitation of the GST rules for gold, the ATO has observed that a significant number of resources is needed to conduct enquiries to ascertain the true nature of transactions, map the supply networks, identify suspicious entities and determine the point in the supply chain where the gold had been altered.1121 In addition, ATO auditors require a high degree of industry knowledge to determine the legitimacy of transactions.

A4.102 The ATO has also observed that when entities, involved in fraudulent activities, become aware of ATO enquiries, they may implement more complex supplier networks which in turn requires more ATO activities. Furthermore, even where suspicious entities and transactions are identified, recovery opportunities may be limited or unsuccessful as the entities may have dissipated assets or funds or left Australia permanently. As a result real-time responses are required to address phoenix type activities, new supply chain entrance and proliferation of suspicious arrangements.1122

930 ATO, 'Criminal Law Investigations Gold Briefing' (Internal ATO document, 27 May 2016) cited in ATO, 'Executive Summary SFCT Evaluation Intel Bulletin Precious Metals' (Internal ATO document, 2017) p 3.

931 World Gold Council, 'Global gold demand' <>.

932 London Bullion Market Association (LBMA), The Guide - An Introduction to the Global Precious Metals OTC Market, (2017) p 9.

933 The other is the LBMA Gold price, also known as the London gold fixing: above n 932, p 50.

934 The gold spot price is derived from the intra-day trade in the commodity markets: <>.

935 Gold Price, 'Gold Price Australia' (2018) <>.

936 ATO, 'Precious Metals Industry – Improving industry compliance – GST Options Paper' (Internal ATO document, April 2016) p 4.

937 Ore or other material, containing gold, which is extracted by miners.

938 LBMA, Precious Metals Integrity - Responsible Sourcing (2018) pp 5 and 7.

939 LBMA, 'Good Delivery List' (2018) <>.

940 Above n 938, p 6.

941 LBMA, 'Refiners Search' (2018) <>.

942 Above n 936, p 4.

943 ATO, 'Goods and Services Tax: What is 'precious metal' for the purposes of GST?, GSTR 2003/10', 18 June 2003, paras [11] and [18].

944 A New Tax System (Goods and Services Tax) Act 1999 s 9-5.

945 A New Tax System (Goods and Services Tax) Act 1999 s 29-10(3).

946 A New Tax System (Goods and Services Tax) Act 1999 s 11-15.

947 Explanatory Memorandum to the A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999 para [1.11].

948 A New Tax System (Goods and Services Tax) Act 1999 s 38-385.

949 A New Tax System (Goods and Services Tax) Act 1999 s 40-100.

950 Above n 936, p 7.

951 A New Tax System (Goods and Services Tax) Act 1999 Div 66.

952 Prof Dr Ben JM Terra, 'New VAT rules on investment gold' (1999) 10(1) VAT Monitor, p 16.

953 Directive 98/80/EU, art 26F.

954 New Zealand Policy and Strategy, Inland Revenue and the Treasury, GST Current Issues – An Official's issues paper (2015) pp 15–17.

955 The relevant purity for gold is defined as having at least 99.5 per cent fineness.

956 Michael Walpole, 'Tackling VAT Fraud', International VAT Monitor (September/October 2014) pp 258–263.

957 Above n 8.

958 The implementation and operation of the GST system is discussed at length in the IGT's Review into GST Refunds (2018).

959 ATO, 'Office Minute' (Internal ATO document, 19 September 2013).

960 ATO communication to the IGT, 27 February 2018.

961 Above n 947, para [1.11].

962 A New Tax System (Goods and Services Tax) Act 1999 s 195-1.

963 Above n 947, para [1.11].

964 ibid.

965 ATO, 'Intelligence Assessment – Carouselling and Missing Trader Fraud - Overview' (Internal ATO document, 24 August 2006).

966 A New Tax System (Goods and Services) Act 1999 Div 165.

967 ATO, 'TCN paper' (Internal ATO document, 27 November 2013) p 4 citing ATO, 'Interpretative Advice Report No. 3328808' (Internal ATO document, undated).

968 ATO, 'TCN Discussion Paper' (Internal ATO document, 24 July 2014).

969 Above n 943, para [34].

970 ATO, 'Law Advocacy Working Group' (Internal ATO document, 25 May 2016) p 4.

971 Gold is a soft metal, little harder than a finger nail: Moh's scale of hardness.

972 ATO, 'Indirect Tax SES Brief' (Internal ATO document, 1 December 2015).

973 Above n 8, pp 73–74.

974 ATO communication to the IGT, 20 July 2017; AUSTRAC, Typologies and Case Studies Report 2013 (2013) p 13.

975 Above n 936, p 21.

976 ATO communication to the IGT, 19 December 2017.

977 Nicholas Van Praet, 'Revenue Quebec investigates widespread gold fraud', Financial Post (online) 10 June 2011 <>.

978 An explanation of this taskforce is provided in Chapter 7 of this report.

979 ATO communication to the IGT, 20 July 2017.

980 ibid.

981 ATO, 'Operational Intelligence Assessment' (Internal ATO document, March 2015) p 6.

982 ATO communication to the IGT, 20 July 2017.

983 Above n 981, p 6.

984 ATO communication to the IGT, 20 July 2017.

985 ATO, 'Operational Intelligence Alert' (Internal ATO document, 20 June 2013).

986 ATO communication to the IGT, 20 July 2017.

987 ibid.

988 ibid.

989 ATO, 'Operational Intelligence Alert' (Internal ATO document, 19 March 2013).

990 ATO, 'IGT Review Information Request - Precious Metals Timeline' (Internal ATO document, undated) p 1, which refers to CACT/SNC Meeting regarding specific activities undertaken by Indirect Taxes and further instructions.

991 The SNC business line was incorporated within the PGH business line in July 2014.

992 ATO, 'SNC/ITX cross BSL Risk strategy' (Internal ATO document, 15 May 2013).

993 ATO communication to the IGT, 'IGT-PM_REQ1' (undated) p 1.

994 Above n 990, p 3, refers to ATO, 'PGH Exec AC briefing – Gold Bullion Treatment Strategy' (Internal ATO document, 28 May 2013).

995 Inferred from ATO, 'Project Outline - Gold bullion' (Internal ATO document, 21 August 2013) p 7.

996 ATO, 'Precious metals Governance Chronology' (Internal ATO document, 28 February 2018) pp 1–2; A New Tax System (Goods and Services) Act 1999 Div 165; Above n 995, p 5.

997 Above n 995, p 7.

998 Above n 990, pp 1 and 3; ATO, 'PGH Exec AC briefing – Gold Bullion Treatment Strategy' (Internal ATO document, 28 May 2013); Above n 992; ATO, 'PGH Exec briefing on ongoing risk for gold bullion industry' (Internal ATO document, 21 October 2013).

999 ATO 'Precious Metals Governance Chronology' (Internal ATO document, 28 February 2018) p 1.

1000 Above n 985, pp 4–5.

1001 ibid.

1002 ibid., p 5.

1003 Above n 990, p 3, refers to 16 July 2013 Risk Assessment; ATO, 'Operational Intelligence Product Tasking Plan-GST Risk and Intelligence Precious Metals Project 2013–2014' (Internal ATO document, 25 October 2013).

1004 Above n 936.

1005 Chris Vedelago, Cameron Houston, 'Rivers of gold: Raids take shine off alleged scam that has cost taxpayers an estimated $200m', Sydney Morning Herald, 13 July 2014.

1006 Above n 995, p 5.

1007 ATO, 'Operational Intelligence Product Tasking Plan-GST Risk and Intelligence Precious Metals Project 2013–2014' (Internal ATO document, 25 October 2013).

1008 Above n 995, pp 7–10.

1009 Above n 990, pp 1 and 3; ATO, 'Cross agency meeting – gold bullion project – Agenda' (Internal ATO document, 17 September 2013); Above n 990, p 1, which refers to 14/10 Cross Agency Meeting SNC/ATP/ITX (Agenda/Minutes/Presentation Gold Bullion); AFP, Annual Report 2013–14 (2014) p 55.

1010 Above n 981, p 6. It was later reported that the amount collected was $22 million: AFP, Annual Report 2013–14 (2014) p 55.

1011 Above n 981, p 6.

1012 ATO, communication to the IGT, 8 January 2018.

1013 ibid.

1014 ATO, 'Minutes of meeting, Cross Agency Workshop – Operation Nosean' (Internal ATO document, 24 June 2014) p 2.

1015 ATO, 'Commissioner Briefing Minute' (Internal ATO document, 25 October 2016) p 2.

1016 Above n 990, p 1.

1017 Above n 981, p 6.

1018 ATO communication to the IGT, 12 July 2017.

1019 Commonwealth, Senate Economics Legislation Committee, Proof Committee Hansard – Estimates, 28 February 2018, p 69 (Deputy Commissioner of the PGH business line).

1020 Above n 1014, p 7.

1021 ibid., p 6; Above n 1015, pp 1–2.

1022 ATO communication to the IGT, 6 June 2018.

1023 ATO, 'Project Status Report (1 November 2016 – 28 February 2017)' (Internal ATO document, undated) p 6.

1024 ATO communication to the IGT, 12 July 2017.

1025 Above n 1023, p 10.

1026 ATO communication to the IGT, 23 April 2018.

1027 Above n 1014, p 9.

1028 ibid., pp 2, 6 and 9.

1029 ibid., p 4.

1030 Above n 985, p 4.

1031 A New Tax System (Goods and Services) Act 1999 Div 66.

1032 Above n 985.

1033 Above n 1007.

1034 ATO, '…Application of s 38-385 to 'precious metal' refined from scrap' (Internal ATO document, 27 November 2013) pp 1 and 5–6; Above n 999, p 4.

1035 Above n 1034, p 1.

1036 Above n 999, p 4.

1037 A New Tax System (Goods and Services) Act 1999 s 66-5(1).

1038 Above n 990, p 4; Above n 999, p 2.

1039 Above n 999, p 2.

1040 ibid., p 3; Above n 936; Above n 1014, p 9.

1041 A New Tax System (Goods and Services Tax) Act 1999 s 38-385.

1042 A New Tax System (Goods and Services Tax) Act 1999 Div 66; Above n 990, p 2.

1043 Above n 936.

1044 Above n 990, p 4, refers to contact established with Integrated Tax Design (ITD).

1045 Above n 999, p 3.

1046 ibid.; Above n 990, p 3.

1047 Above n 1007, pp 2–3.

1048 AFP, Annual Report 2013–14 (2014) p 55.

1049 Above n 990, p 3; Above n 999, p 3.

1050 Above n 990, p 2; ATO, 'Precious Metals (Gold Project) an Indirect Tax Executive Submission Paper' (Internal ATO document, 27 March 2015).

1051 ATO, 'Precious Metals (Gold Project) an Indirect Tax Executive Submission Paper' (Internal ATO document, 27 March 2015) p 2.

1052 ibid.

1053 Note, the total estimate of total future revenue leakage was based on a three and a quarter year horizon and only half of the dataset which had been received at that time: Above n 1051, p 2.

1054 Above n 981, pp 4 and 13.

1055 Above n 990, p 4.

1056 ATO communication to the IGT, (undated) 'IGT-PM-REQ3' p 3.

1057 Above n 999, p 3; Above n 990, p 2.

1058 ATO, 'ITX Precious Metals Project' (Internal ATO document, undated).

1059 Above n 999, p 3.

1060 Above n 1051.

1061 ibid.

1062 Above n 1023, p 17.

1063 Above n 1014, pp 2 and 9.

1064 ATO communication to the IGT, 19 December 2017; Above n 990, p 2.

1065 Above n 990, p 3.

1066 ATO, 'GST and precious metals - Senate Estimates' (Internal ATO document, March 2017) p 3.

1067 Above n 999, p 2.

1068 ATO, 'Note: Application of the A New Tax System (Goods and Services) Act 1999 (GST Act) to gold schemes' (Internal ATO document, 13 February 2015) pp 9–11.

1069 Above n 1058.

1070 ibid.; Above n 1015, p 2.

1071 Above n 1015, p 1; see Above n 1023, p 8.

1072 Above n 1066, p 3.

1073 Above n 1023, p 8.

1074 ibid.; ATO, 'GST Product Committee' (Internal ATO document, 21 April 2017) p 2.

1075 ATO, 'Action Brief GST Treatment of Precious Metals' (Internal ATO document, 26 August 2016) pp 5–6.

1076 Above n 990, p 4.

1077 Above n 999, p 5.

1078 Above n 981, p 5.

1079 Above n 990, p 3.

1080 Council of Australian Governments, Intergovernmental Agreement on Federal Financial Relations (2011) cl 25.

1081 Above n 990, p 4; Above n 981, p 5.

1082 TCN responded to the ITX business line's March 2015 request for clarification that gold need not have LBMA accredited hallmarks to be in 'investment form' and confirmed its early advice on the second hand good issue: Above n 999, p 3; ATO, 'TCN advice' (Internal ATO document, 25 March 2015).

1083 ATO, 'Precious Metals – Law Advocacy Action Items' (Internal ATO document, 20 October 2015) p 5.

1084 ibid., p 2; see also, ATO, 'Precious Metals – Law Advocacy Action Items' (Internal ATO document, 10 November 2015) p 3.

1085 Above n 990, p 4.

1086 ATO, 'Advocacy Alert – GST on precious metals', 20 January 2016, pp 1–2.

1087 ATO, 'ITX Executive Briefing Minute' (Internal ATO document, 6 May 2016).

1088 Above n 936, pp 25–26.

1089 ibid., p 22.

1090 Above n 1075, pp 1–2.

1091 ATO, 'Indirect Tax SES Brief-Big four Meetings' (Internal ATO document, 27 October 2017).

1092 Above n 1058.

1093 Above n 1074, p 1.

1094 ibid.

1095 ATO, 'PMP Steering Committee Minutes of Meeting' (Internal ATO document, 13 October 2016).

1096 ATO, 'PMP Band 2 Steering Committee – Action Item register' (Internal ATO document, 10 March 2017).

1097 Taxation Administration Act 1953 s 8AAZLGA.

1098 Above n 1058.

1099 Above n 1074, p 2.

1100 Above n 990, p 2.

1101 Judiciary Act 1903 s 39B; ATO, 'Commissioner Briefing' (Internal ATO document, 17 May 2017).

1102 Eastwin Trade Pty Ltd v Commissioner of Taxation [2017] AATA 140.

1103 Robert Gottleibson, 'Tax office in stunning U-turn on gold tax fraud', The Australian, 11 January 2017.

1104 Optigen Ltd (C-354/03), Fulcrum Electronics Ltd (C-355/03) and Bond House Systems Ltd (C-484/03) v Commissioners of Customs & Excise, Judgment of the European Court (Third Chamber), 12 January 2006, 62003CJ0354.

1105 Above n 8.

1106 ATO communication to the IGT, 12 July 2017.

1107 Above n 1023, p 10.

1108 Above n 1074, p 2.

1109 ATO communication to the IGT, 12 July 2017.

1110 ibid.

1111 ATO communication to the IGT, 6 December 2017.

1112 ATO, 'Project Status Report' (Internal ATO document, 28 February 2017) p 3.

1113 ATO communication to the IGT, 12 July 2017.

1114 ATO, 'Ministerial Briefing' (Internal ATO document, 13 January 2017).

1115 Above n 1091.

1116 Above n 1114, p 3.

1117 The Hon. Kelly O'Dwyer, MP, Minister for Revenue and Financial Services, 'Combatting fraud in the precious metals industry' (Media Release, 31 March 2017).

1118 Explanatory Memorandum to the Treasury Laws Amendment (GST Integrity) Bill 2017, p 3.

1119 ATO, 'GST and precious metals – Senate Estimates' (Internal ATO document, October 2017).

1120 ATO communication to the IGT, 8 January 2018; Above n 977.

1121 ATO, 'Precious Metals Industry Workshop' (Internal ATO document, 10 May 2016) pp 9–10.

1122 ibid., p 9.