Overview
An entity may invest in precious metals such as gold, silver or platinum, either through securities trading on the ASX or by physically holding the investment.
This article explains how to set up a precious metal account and how to sell a precious metal investment such as gold, and the CGT implications.
Investing via shares
You may also invest in companies that operate within the precious metals sector. If the company is publicly traded, or available through a publicly traded ETF, you can create an investment account using the relevant security code.
Where the security is listed on a supported exchange, Simple Fund 360 and Simple Invest 360 will automatically update the investment’s value through the Create Entries process.
Investing in precious metals
When a fund invests in physical quantities of precious metals such as purchasing Gold Bullion, the investment will need to be set up in Simple Fund 360 or Simple Fund 360 with a new security code. The security code will need to be unique, i.e., GOLD is already in use and an alternative must be entered.
Before creating the investment, decide what control account you wish the investment to be listed under in the financial reports. Recommendations are to use control accounts 76000 Other Assets or 71000 Collectables.
Create the Investment account and record the purchase
- Navigate to the Investment Security List.
- Select + Add Security.
- Set the Market Type to Commodities and Precious Metals, input a Security Code, Security Name, and click Save
- Navigate to the Chart of Accounts.
- Create a new Investment Account
- Select the Investment Type. Recommendations are to use control accounts 76000 Other Assets or 71000 Collectables.
- Click Save to create the investment.
- Record the purchase at cost and input the units as the number of ounces purchased.
If applicable Gold Insurance can be recorded as an expense to the Investment Expense Account 37500/InvestmentCode.
To reflect changes in the price, you will need to update the value price per ounce (oz) manually. For more detail on how to update a security price, refer to Manually Revaluing Security Prices.
Spot prices for precious metals can be found on a number of websites, such as Perth Mint.
Disposing of Precious Metals
Disposing of precious metals, such as gold, is treated in the same way as disposing of other investments.
As precious metals are classified as unlisted investments, it’s important to review the Unrealised Capital Gain Report before disposal to ensure the investment has the correct cost base.
How to dispose of Precious Metals
- From the Transactions List screen, create a journal.
- Enter the number of units being disposed of in the Units column.
- Enter the amount received for the precious metal in the Credit column.
Capital Gains Treatment
Capital gains are calculated automatically. Any change in market value will be posted to the 24700 Changes in Market Value account.
If the entity has held the precious metal (for example, gold) for the required period, the software will automatically apply any applicable capital gains discount.