Buying or selling gold jewellery? From 1 Jan 2025, changes to GST administrative concession for trade-in of gold jewellery will take effect
Currently, IRAS grants an administrative concession for the trade-in of gold jewellery.
Under the administrative concession, jewellers can choose to charge GST on the difference between the value of the new gold jewellery, and the value of the old gold jewellery, regardless whether the customer is registered for GST.
This administrative concession is applicable only for gold jewellery trade-in transactions and it does not extend to the trade-in of other goods (such as gold bars) even if these goods are traded in for gold jewellery.
*NEWChanges with effect from 1 Jan 2025
The administrative concession for trade-in of gold jewellery applies only when the customer is not registered for GST at the time of supply.
Who is affected by the change?
Jewellers that engage in gold jewellery trade-in transactions with GST-registered suppliers and/ or customers.
Overview of the change
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It is not compulsory for jewellers to apply the administrative concession for trade-in of gold jewellery. Jewellers that are unable to distinguish whether their customers are registered for GST at the time of supply from 1 Jan 2025 can choose not to apply the administrative concession. In this case, the normal GST rule on trade-in applies.
For more details, please refer to our e-Tax guide GST: GST and the Gold Jewellery Industry
Below are some common trade-in of gold jewellery scenarios with the correct GST treatment and errors to avoid.
Scenario 1: Trade in of gold jewellery between a gold jewellery retailer (GST-registered) and a retail customer (non-GST registered)
GST Treatment
Since the retail customer is not registered for GST, the gold jewellery retailer can choose to apply the administrative concession for trade-in of gold jewellery. Under the administrative concession, the gold jewellery retailer can charge and account for GST based on the difference between the value of the new gold jewellery ($1,500) and the value of the old gold jewellery (i.e. $1,200).
Trade in of gold jewellery with other materials between a gold jewellery retailer (GST-registered) and a retail customer (non-GST registered)
Wrong practice
The gold jewellery retailer applies the administrative concession for trade-in of gold jewellery on the other materials traded-in (i.e. ruby and jade) and consequently, charge and account for GST based on the difference between the value of ruby (i.e. $200) and the value of the jade (i.e. $100).
Correct GST Treatment
As the administrative concession for trade-in is applicable only for gold jewellery, the gold jewellery retailer is not allowed to apply the administrative concession for trade-in of other materials, in this case, ruby and jade. The GST-registered jewellery retailer needs to charge and account for GST on the full value of the ruby (i.e. $200).
As for the trade-in of gold jewellery, the gold jewellery retailer can choose to apply the administrative concession for trade-in of gold jewellery to charge GST on the difference between the value of the new gold jewellery (i.e. $1,300) and the value of the old gold jewellery (i.e. $1,000).
Trade in of gold jewellery between a gold jewellery retailer (GST-registered) and a gold jewellery wholesaler (GST-registered) wef 1 Jan 2025
Wrong practice
The gold jewellery wholesaler applies the administrative concession for trade-in of gold jewellery with GST-registered gold jewellery retailer and consequently, charge and account for GST based on the difference between the value of the new gold jewellery (i.e. $1,500) and the value of the old gold jewellery (i.e.$1,200).
Correct GST Treatment
From 1 Jan 2025, the administrative concession for trade-in of gold jewellery only applies when the customer is not registered for GST at the time of supply.
In this case, the gold jeweller wholesaler is not allowed to apply the administrative concession for trade-in of gold jewellery as the customer (i.e. gold jewellery retailer) registered for GST.
Instead, the gold jewellery wholesaler is required to issue a tax invoice to the gold jewellery retailer for the value of the new gold jewellery (i.e. $1,500) and to charge and account for GST on this value.
Conversely, the gold jewellery retailer is required to issue a tax invoice to the gold jewellery wholesaler for the value of the old gold jewellery (i.e. $1,200) and to charge and account for GST on this value.