Do you sell or buy gift vouchers in your business?
Getting the GST treatment right and knowing when to report the GST when buying or selling a gift voucher is important.
Generally speaking, the sale of a gift voucher (which can be redeemed for a choice of goods or services up to the voucher's value) does not attract GST. The redemption of the voucher is the time when you record and report the GST If only part of the gift voucher is redeemed, you only need to report the GST on that part.
A voucher is considered to be:
- a token, coupon or similar article
- it has a stated monetary value
- it can be redeemed for other supplies in accordance with its terms.
The stated monetary value may be printed on the voucher or printed on documents accompanying the voucher
Broadly speaking, if you sell a voucher for its stated monetary value and the holder is entitled to redeem it for goods or services up to that value, you don't account for the voucher on your activity statement until it is redeemed.
When a voucher is redeemed in full for goods or services you sell, the payment for the sale is the stated monetary value of the voucher and any additional payment received.
You report the full price of the sale on your activity statement at label G1 (total sales) for the reporting period in which the voucher was redeemed.
Buying a voucher
So what happens if you are buying a voucher for your business?
Broadly speaking, when you buy a voucher, you don't claim input tax credits on your activity statement. Purchasing a gift voucher does not attract GST. It is when you redeem a voucher for goods and services that you then claim the input tax credits.
If you purchase a voucher and then use the voucher to obtain something that is a taxable supply to you, you are entitled to claim a GST credit if that purchase is used in your business. However, you are not entitled to claim a GST credit for that purchase if it either:-
- relates to making input taxed sales or
- is of a private or domestic nature.
Regardless of whether you account for GST on a cash or non-cash basis, you must claim your GST credits for any purchases you make with the voucher, in the same reporting period you redeem the voucher, and not in the reporting period that you purchase the voucher.