In short
- Two silver coins of the same weight can cost very different amounts. The difference is what you are paying for.
- A bullion coin is made to hold silver. A proof or collector coin is made for collectors, so its price also reflects its design and finish.
- In Australia, silver bullion coins of 99.9 per cent purity carry no GST from a dealer. Collector and proof coins can.
- Tax and super each have their own tests for coins, and some questions are not settled, so check before you choose.
Same silver, different price
You may have noticed it already. One silver coin sits close to the price of the metal. Another, the same weight, costs far more. Both are silver, so why the gap?
It comes down to what each coin is made for. Some coins are made to hold silver. Others are made to be collected.
Three kinds of silver coin
The table sets the three side by side.
| Kind of coin | Made for | GST in Australia |
|---|---|---|
| Bullion coin | Holding the metal | None (99.9%, from a dealer) |
| Proof coin | Collectors; special finish | Can apply |
| Collector coin | Collectors; design, series | Can apply |
A bullion coin is made to hold silver, and its price follows the metal. If it is 99.9 per cent pure and bought from a dealer, it carries no GST. A proof coin is made for collectors, with a special finish, and GST can apply. A collector coin is made for its design or its place in a series, and GST can apply to it too.
Collector and proof coins are not counted as investment metal. That is why GST can apply to them.
The face value on the coin
Australian bullion coins have a face value stamped on them. They are legal tender, but only at that face value, which is far below the value of the silver in them.
So the face value is not what the coin is worth. It tells you the coin is legal tender. The silver tells you what it is worth to hold.
Tax when you part with a coin
When a coin goes for more than you paid, the gain is usually a capital gain. If you have owned it for at least 12 months, individuals (other than foreign or temporary residents) get a 50 per cent discount on the gain, and super funds get a third off. The 50 per cent discount applies to sales before 1 July 2027. A law already passed replaces it with indexation, an adjustment for inflation, for gains from 1 July 2027 for Australian resident individuals and trusts. Whether that change applies to super funds is not yet settled.
Coins add a twist. The tax office lists coins and medallions as collectables, which have their own rules. A collectable acquired for $500 or less is exempt. A loss on a collectable can only be set against gains on collectables.
The tax office does not say whether a bullion coin held as an investment is a collectable. So this article does not say either way. If you are choosing between coins and bars, your accountant is the right person to ask first.
Coins in a self-managed super fund
Super has its own test. In a self-managed super fund, a bullion coin is treated as a collectable only if it is worth more than its face value and sells for more than the spot price of the metal in it. Collectables carry extra rules, such as insurance in the fund’s name within seven days.
Said simply: both tests have to be met. The second compares the coin’s selling price with the spot price of its metal, so any premium above spot counts. More on metal in super is in Gold and silver in super.
Paying for coins
Bullion dealers are covered by Australia’s anti-money laundering law. The ID checks and the $10,000 cash report are set out in Getting silver from a dealer in Australia.
A dealer’s two prices
Every dealer has two prices for a coin: what it asks, and what it will pay back. The gap can differ between bullion coins and proof or collector coins. Ask the dealer for both prices before you choose, so you can see the gap for yourself.
Three questions to ask before you choose
Before you hold any silver coin, it helps to ask three things. Am I paying for the silver, or for the design? Will GST apply? And what would a dealer pay me for it back today?
My view
Silver is my preferred metal, because it gets used, not only stored. That’s my opinion, and you don’t have to share it or agree with it.
One easy next step
If you would like the money lessons in order, from what bullion is to how it is kept, the free lessons by email walk through each one in plain words. All you need is your first name and email.
Nicholas holds some of the assets discussed in this article.
Education only, not personal or financial advice.