The one rule that fixes 90% of the confusion
Gold buyers, pawnbrokers, jewellers, and bullion dealers all run into the same problem: their accountant gives them one GST answer, their supplier gives them another, and somewhere in the middle their margin disappears. The fix is small but precise:
The two worlds, side by side
Most disputes between dealers and IRD come down to which bucket an item belongs in. Get this right at the moment you write the price tag, not after the audit:
NO GST charged
- Pure gold bars and bullion (typically 99.5%+).
- Investment-grade coins (recognised by IRD lists).
- Treated as exempt or zero-rated supply.
- Buyer pays the metal price — no 15% added.
15% GST applies
- Rings, chains, necklaces, scrap jewellery.
- 9k, 14k, 18k items — anything below fine-metal purity.
- Treated as ordinary goods supply.
- Buyer pays the listed price + 15% GST on top.
| Bullion bar — listed price | $3,000.00 |
| GST on bullion (exempt) | $0.00 |
| Customer pays for bullion | $3,000.00 |
| 18k ring — listed price | $1,000.00 |
| GST on ring (15%) | $150.00 |
| Customer pays for ring | $1,150.00 |
The second-hand gold trap
This is the one that hurts the most — and it catches almost every new gold buyer in New Zealand at least once.
When you buy second-hand goods from a private seller (someone who isn't GST-registered), IRD usually lets you claim a notional GST input credit of 3/23 of the purchase price. So if you buy a TV for $2,300, you can claim $300 back in GST even though no GST was actually charged. Magic.
Fine metals are explicitly excluded from the second-hand goods GST claim. You can claim it on jewellery (if it's not fine-metal pure), but you cannot claim it on investment-grade bullion. Many gold buyers claim 3/23 across the board and end up with a nasty surprise on their next IRD review.
| Buying second-hand from a private seller | Can you claim 3/23? |
|---|---|
| TV / tools / car / general goods | Yes |
| Jewellery (not fine-metal) | Yes |
| Pure gold bullion / investment coins | No |
The three situations every gold trader faces
You buy a chain from the public for $1,000. You can claim 3/23 = $130.43 input GST. You polish it up and sell it for $1,500 + GST = $1,725.
Margin: $500 + GST. GST flows through the books cleanly. This is how it's supposed to work.
You buy a 1oz gold bar at $3,000. No GST claimed (it's exempt). You sell for $3,200. No GST charged.
Margin: $200. GST never enters the picture. Your books should record it as an exempt supply, not a zero-rated normal sale.
You assume "all gold is GST-free" (or "all gold has 15% GST") and apply one rule to everything. Either you over-claim input GST on bullion you can't claim, or you forget to charge GST on jewellery you should have.
IRD's audit team will spot this within minutes when they pull your purchase records against your sales. The penalty isn't just the unpaid GST — it's the use-of-money interest stacked on top.
The pricing rule (write this on the wall)
Pricing in this niche isn't about the metal — it's about the category. Get the category right and the pricing maths takes care of itself.
The 3 rules to never lose money on a gold transaction
Decide the category before you write the tag. Fine metal vs jewellery is the only question that matters for GST. Doing it after the sale means rebuilding the invoice.
When you sell bullion, your books need to mark it exempt — not zero-rated, not GST-inclusive. Wrong tag = wrong GST101 line, and IRD notices.
If the second-hand item is fine-metal gold, the 3/23 input credit doesn't apply. Build a small purchase checklist that asks 'is it fine metal?' before the journal posts.
Why this matters for your margin
In gold trading, GST mistakes don't show up in your tax return — they show up in your margin. Three patterns we see most often:
- Claiming 3/23 on bullion purchases. Margin looks bigger until IRD claws it back a year later, often with interest.
- Forgetting to charge 15% GST on broken / scrap jewellery refined into resale items — that's a sale of jewellery, not bullion, even if the gold inside it is high purity.
- Treating dealer-to-dealer bullion swaps as ordinary sales when they should be exempt. Inflates your turnover and your apparent GST liability.
"GST mistakes in gold trading don't happen in accounting — they happen at the moment you put the price tag on. Get the classification right and the books look after themselves."
What this looks like for you
We work with several NZ gold buyers and pawn-style dealers on monthly bookkeeping. The repeatable wins:
- Set up your Xero with two distinct sales tax codes — one for exempt fine-metal sales, one for standard-rated jewellery. Reconciling becomes a 5-minute job, not a nightmare.
- Build a one-question check at the buying counter: "Is this fine-metal gold?" — then the till receipt classifies it for you.
- Email you a monthly GST position with exempt vs taxable supplies on separate lines, so the GST101 return is a copy-paste — not a project.