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From 30 May 2018, anyone dealing in scrap metal in Victoria is:
- prohibited from paying or receiving cash when they buy or sell scrap metal
- required to keep certain records of those transactions
- required to register as a second-hand dealer by 1 September 2018.
The new laws were introduced through amendments to the Second-Hand Dealers and Pawnbrokers Act 1989 (the Act) and the new Second-Hand Dealers and Pawnbrokers (General, Exemption and Record-Keeping) Regulations (the Regulations).
How to register
The new Regulations require anyone who deals in scrap metal to be a registered second-hand dealer by 1 September 2018.
To become a registered second-hand dealer, you will need to apply to the Business Licensing Authority. To ensure that your application has time to be processed, please lodge it by 1 July 2018.
You can apply to register on our Apply for registration and endorsement page.
What is scrap metal?
Scrap metal is anything of commercial value that is:
- made from or contains metal, and
- sold or obtained as scrap for recycling or reprocessing.
- a motor vehicle sold or obtained as scrap whether or not it is in working condition, and
- the body, engine or chassis of a motor vehicle sold or obtained as scrap.
Under the new Regulations, scrap metal includes:
- anything that contains 2% or less by weight of gold or silver, and
- anything that contains 80% or less by weight of copper.
If your goods do not meet the scrap metal definition, they may be considered second-hand goods or motor cars. For example, goods containing more than 80% or more by weight of copper are considered second-hand goods rather than scrap metal. Anyone dealing in such goods must comply with additional requirements for second-hand goods under the Act, but the ban on cash for scrap will not apply. For more information, view the Keeping records – second-hand dealer and pawnbroker obligations page.
No cash payments
You must not pay or receive cash for scrap metal you buy or sell. You can only buy or sell with:
- a cheque that is not transferable or payable to cash, or
- an electronic funds transfer, excluding e-currency.
E-currency is any internet based, electronic means of exchange that is not made via a bank or other authorised deposit taking institution; for example, bitcoin.
To inform your customers about the ban on cash payments for scrap metal, please print out our Notice for consumers: Cash payments for scrap metal are banned (PDF, 26KB) or Notice for consumers: Cash payments for scrap metal are banned (Word, 39KB) and display it at your workplace.
The Regulations set out the particular details that you must keep of every transaction, regardless of where the transaction was conducted.
When buying scrap metal, a dealer is required to record for each item:
- an accurate description, including its quantity and/or weight
- if it is a motor vehicle, its vehicle identifier
- the name and address of the seller
- the identification details of the seller
- the date and time the scrap metal was received
- a copy of the cheque or electronic funds transfer, and
- the name of any person acting on behalf of the scrap metal dealer.
When selling scrap metal, a dealer is required to record for each item:
- an accurate description of the scrap metal including its quantity and/or weight
- if it is a motor vehicle, its vehicle identifier
- the name and address of the buyer
- the date, time, method and location of disposal
- a copy of the cheque or electronic funds transfer
- the name of any person acting on behalf of the scrap metal dealer
- if the scrap metal is removed by a shipping container, the name of the shipping company, the overseas port destination and the number or identifier displayed on the shipping container.
Buying or selling scrap metal in a lot or parcel
Scrap metal dealers will not be required to record the details for each item when it is obtained or disposed of in a lot or a parcel. A single entry will be permitted in the record-keeping system that records the required details.
This rule only applies if the value of each item is less than $100. If the value of an item in a lot or parcel is $100 or more, the dealer must separately record that item’s details.
Second-hand goods purchased at auction
A receipt from an auctioneer for second-hand goods purchased at auction, including scrap metal, can be provided electronically to a second-hand dealer.
Exemption from retention requirements
Under the new Regulations, second-hand goods that are exempt from the requirement to be kept for seven days include:
- all scrap metal as defined in the Act and the Regulations
- end-of-life motor vehicles, provided certain conditions are met
- copper that is a second-hand good (anything that contains more than 80% by weight of copper) if the second-hand dealer retains a photograph identifying the goods
- goods that have been purchased from a second-hand dealer who has already kept the goods for seven days.
Retention of copper
To be exempt from the requirement to keep second-hand goods containing more than 80% by weight of copper for seven days, second-hand dealers must record photographic evidence of the goods. If they do not retain photographic evidence, they must retain the copper goods for seven days. This requirement is in addition to the record-keeping requirements that all second-hand dealers must keep when they buy and deal in second-hand goods.
Retention of motor vehicles
The new Regulations set out the following conditions to be satisfied before a second-hand dealer will be exempt from the seven-day retention requirement for second-hand vehicles:
- if the vehicle is more than 15 years old, it must be acquired only for the purpose of demolishing or dismantling
- if the vehicle is 15 years old or less, it must be entered on the written-off vehicle registry as a statutory write-off.
In all cases, second-hand dealers must also record and retain:
- the results of a vehicle registration search verifying that it is not stolen, and
- photographic evidence showing the vehicle identifier, or if that is not possible, any other identifying mark or number.
Reprocessing or dismantling vehicles
Vehicles bought for the purpose of recycling or reprocessing of the metal are subject to the laws banning cash-for-scrap.
Under the new laws, second-hand vehicles bought for dismantling and selling the parts are not subject to the ban on cash-for-scrap. However, dealers must comply with the requirements that apply to these vehicles. For more information, view our Licensing requirements for auto wreckers and recyclers page.
Unidentified motor vehicles purchased for scrap
The new laws prohibit dealings in scrap that consists of a motor vehicle if the vehicle identifier is removed, defaced, obliterated or altered.
If the vehicle identifier has been removed, defaced, obliterated or altered, a scrap metal dealer must not:
- buy a scrap motor vehicle
- possess, sell or dispose of a scrap motor vehicle unless authorised in writing to do so by a police officer.
Where the vehicle identifier has become illegible due to damage, old age or wear you can collect or accept such vehicles as long as you do not make any payment for them. You need to obtain a police officer’s consent in writing before you possess, sell, or otherwise dispose of such vehicles.
A vehicle identifier means the Vehicle Identification Number (VIN) permanently recorded on a vehicle manufactured from 1 January 1989, or in any other case, the chassis number marked on the vehicle in accordance with the Road Safety (Vehicles) Regulations 2009 or corresponding interstate laws.
Enforcement and penalties
The new laws provide police with search and entry powers to:
- enter business and storage premises without a warrant at any time if they reasonably believe that dealing in scrap metal is being carried on at that time
- seek a search warrant from a magistrate to monitor compliance with the Act and the Regulations.
New offences support the scrap metal laws. The new offences include:
- buying or selling scrap metal for cash (200 penalty units)
- buying, disposing of or possessing an unidentified motor vehicle (200 penalty units)
- not keeping the records of transactions (20 penalty units)
- giving false or misleading information to a police officer (50 penalty units).
Under the new Regulations, police can issue on-the-spot fines for a number of offences; for example, for:
- not being registered as a second-hand dealer (10 penalty units)
- dealing in cash for scrap (12 penalty units) and
- dealing in unidentified motor vehicles for scrap (12 penalty units).
As of 1 July 2017, the current value of a penalty unit is $158.57.
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