Capital Gains Tax on Gold and Silver Investments in Australia

Gold and silver investing has long played a role in Australian portfolios. Precious metals are often seen as tangible assets that may help manage exposure to inflation, currency movements and broader economic uncertainty.

Despite this, gold and silver are commonly misunderstood from a tax perspective. Some investors assume precious metals are taxed like shares. Others believe physical bullion is private and therefore outside the Australian Taxation Office’s view. There is also a perception that because gold and silver do not generate income such as dividends or rent, they are treated differently for tax purposes.

In reality, capital gains tax applies to most forms of gold and silver investing in Australia, and the outcome can vary significantly depending on what you invest in, how you hold it, how long you hold it and whether your activity is considered investing or trading.

Capital Gains Tax Treatment of Gold and Silver in Australia

For Australian tax residents, most gold and silver investments are capital gains tax assets under Part 3-1 of the Income Tax Assessment Act 1997.

This commonly includes:

• Physical gold bullion bars
• Physical silver bullion bars
• Bullion coins, including legal tender coins
• Allocated bullion held in vaults
• Unallocated bullion accounts, depending on legal structure
• Gold and silver exchange traded funds (ETFs or ETCs)
• Units in precious metals investment funds

If gold or silver is acquired as an investment and later disposed of for more than its cost base, the profit is generally treated as a capital gain.

Capital Gains Tax Events for Gold and Silver Investments

Capital gains tax does not apply simply because the value of gold or silver increases. It is triggered when a CGT event occurs, most commonly CGT event A1, which relates to the disposal of a CGT asset.

A disposal can occur when you:

• Sell bullion back to a dealer
• Sell bullion privately
• Exchange bullion for another asset
• Gift gold or silver to another person
• Transfer bullion into another entity such as a trust or company
• Sell or redeem units in a gold or silver ETF

The capital gain or loss is reported in the income year in which the disposal takes place.

Private Storage of Gold and Silver and ATO Visibility

A common misconception is that gold or silver stored privately is outside the tax system.

Capital gains tax applies regardless of where bullion is stored or how visible the transaction appears. If a CGT event occurs, the gain is assessable whether or not it is immediately apparent to the ATO.

From an ATO risk perspective, this is an important area. Bullion dealers may have reporting obligations, financial institutions create transaction trails and lifestyle audits can identify unexplained wealth, including proceeds from the sale of precious metals.

Poor record keeping is a common issue. Investors who cannot substantiate their cost base may end up with a higher taxable capital gain than necessary.

Collectables and Gold or Silver Coins

Under the capital gains tax rules, certain assets are classified as collectables. These include items such as artwork, antiques, coins and medallions that are acquired for personal enjoyment or collector value.

Some gold and silver coins may fall into the collectables category where their value is driven more by numismatic or collector interest than by metal content.

This distinction matters because capital losses from collectables can only be used to offset capital gains from other collectables. They cannot be applied against gains from shares, property or other CGT assets.

If collectable coins are sold at a loss, that loss may be quarantined and carried forward until a future collectables gain arises. The ATO considers intent and circumstances when determining whether an asset is bullion or a collectable.

Personal Use Asset Exemptions and Precious Metals

Personal use assets acquired for $10,000 or less may qualify for a CGT exemption. However, investment gold and silver will rarely meet the definition of a personal use asset.

Bullion acquired as a store of value or investment is generally not considered to be for personal use. This exemption more commonly applies to items such as jewellery containing gold or silverware that is genuinely used personally.

The burden of proof sits with the taxpayer, and misclassification can result in incorrect tax outcomes.

Capital Gains Tax Discount for Gold and Silver Investments

For individuals and trusts, the 50 percent CGT discount is often the most significant tax planning consideration when investing in gold and silver.

To be eligible for the discount:

• You must be an individual or trust
• The asset must be held for at least 12 months
• The gain must be capital in nature rather than ordinary income

Example:

• Gold purchased for $20,000
• Sold two years later for $30,000
• Capital gain of $10,000
• Discounted capital gain of $5,000
• $5,000 included in taxable income

Companies are not eligible for the CGT discount.

Timing and Capital Loss Strategies for Gold and Silver

The timing of a disposal can affect the overall tax payable. Selling gold or silver in a year when taxable income is lower may reduce the marginal tax rate applied to the gain.

Capital losses from other CGT assets may be used to offset capital gains from gold and silver investments, subject to the collectables rules. Losses must be applied before the CGT discount is calculated.

Investor Versus Trader Classification for Precious Metals

This is a key ATO risk area.

If a taxpayer’s activities amount to a business or profit-making scheme, profits from gold and silver may be treated as ordinary income rather than capital gains.

Indicators the ATO considers include:

• Frequency of transactions
• Length of holding periods
• Level of organisation and systemisation
• Scale and commerciality
• Intention to profit from short-term price movements

A long-term holder who buys bullion as a store of value and sells occasionally is generally treated as a CGT investor. In contrast, someone buying and selling bullion frequently based on spreads, charts or short-term movements is more likely to be considered trading.

Where profits are ordinary income, the CGT discount does not apply. Different deduction, reporting and potentially GST rules may also apply.

Capital Gains Tax Treatment of Gold ETFs and Digital Gold

Many investors gain exposure to gold and silver through financial products rather than physical bullion. These include ASX-listed gold ETFs, international gold trusts, exchange traded commodities and online bullion platforms.

These products are generally treated as CGT assets in a similar way to shares, and the CGT discount may apply if held for more than 12 months.

However, tax outcomes depend on legal structure. Some products may include assessable income components, foreign income, withholding tax obligations or cost base adjustments. Reviewing product disclosure statements and annual tax statements is essential.

Reporting Gold and Silver Investments on Your Tax Return

From an ATO compliance perspective, record keeping is critical. Investors should retain:

• Purchase invoices showing dealer details
• Quantity, weight and purity
• Premiums paid over spot price
• Sale invoices
• Insurance, transport and transaction costs

These amounts may form part of the CGT cost base.

Capital gains and losses from gold and silver investments are reported in the CGT section of the tax return. Common errors include missing cost base information and incorrect classification of gains.

Capital Gains Tax on Gold and Silver in SMSFs

Self-managed super funds can invest in gold and silver, but compliance requirements are strict and closely monitored by the Australian Taxation Office.

Trustees must ensure:

• The fund’s investment strategy permits precious metals
• Storage arrangements are documented
• Assets are kept separate from personal assets
• Valuations are reasonable and supportable at year end

Within an SMSF, capital gains are generally taxed at 15 percent, or an effective 10 percent for assets held longer than 12 months due to the one-third CGT discount. Bullion storage arrangements, particularly home storage, remain a high-scrutiny area.