As a business owner you’re probably familiar with Australia’s goods and services tax (GST) and its implications on your operations. However, when it comes to vouchers, the GST rules can be a bit more complex. If your business sells or buys vouchers, it’s essential to understand how to account for and report GST correctly.
A voucher is a document or an electronic record that represents a right to receive goods or services. This includes physical gift cards, digital vouchers and even prepaid phone cards. When your business sells a voucher, you’re essentially providing the recipient with a promise to supply goods or services in the future. This promise can be redeemed at a later date, and it’s at this point that the GST implications come into play.
The ATO recognises two distinct types of vouchers, and understanding the difference is crucial for your GST obligations.
Face value vouchers can be redeemed for a reasonable choice of goods and services – for example, a $50 supermarket gift card that works across all store locations. The voucher sale isn’t considered a GST taxable supply, so you don’t charge GST at the point when you sell the voucher. Instead, you account for GST when the voucher’s redeemed and the goods or services are supplied. For instance, if you sell that $50 gift card, you don’t charge GST on the gift card sale, but when the gift card’s redeemed to purchase goods worth $50, you charge GST on the supply of those goods.
There’s one exception: if you sell a face value voucher for more than its face value (perhaps a $50 voucher for $55), you must account for GST on the excess amount immediately.
Non-face value vouchers are restricted to specific goods or services – like a voucher specifically for a spa treatment, purchased for $100. With these, you account for GST (eg on the $100 price) at the time of sale, but only if the voucher is redeemable for taxable supplies.
If the voucher is only redeemable for GST-free or input-taxed supplies, there’s no GST to account for.
Here’s something business owners often overlook: if you’ve sold face value vouchers that expire or remain unredeemed, and you write back the unused amount to your current income for accounting purposes, you need to make an “increasing adjustment” on your Business Activity Statement (BAS). This adjustment is 1/11th of the unredeemed balance.
If your business buys vouchers, you may be able to claim a GST credit – but timing matters. For face value vouchers, you claim the credit when you redeem the voucher, not when you buy it. For non-face value vouchers, you claim the credit when you purchase the voucher.
Remember, you can only claim credits for GST-inclusive purchases used in your business – for example, meal vouchers for your employees to use in the course of their work – and you’ll need a tax invoice for purchases over $82.50. If you buy vouchers for personal use, such as gifts for family members, you can’t claim a GST credit.
To account for GST on vouchers you sell, you need to keep accurate records including dates of sale, redemption and/or expiration, and the amounts of GST payable. Importantly, specific rules and exceptions apply to certain types of vouchers. For example, if you sell vouchers that can be redeemed for a combination of goods and services, you need to apportion the GST accordingly. You may also need to issue a tax invoice to the customer when a voucher’s redeemed, and keep a copy of this invoice for your records. And finally, of course, you need to report GST on vouchers in your BAS in accordance with ATO guidelines.