If your business sells or buys vouchers, it’s important to understand how Goods and Services Tax (GST) applies. Whether you’re dealing with physical gift cards, digital codes, or prepaid services, getting the GST treatment right helps you stay compliant and avoid surprises at tax time.
A voucher is a document or digital record that gives the holder the right to receive goods or services. This includes store gift cards, e-vouchers, and prepaid phone credit. From a GST perspective, selling a voucher is essentially a promise to supply something in the future. The key question is: when do you account for GST?
The Australian Taxation Office (ATO) identifies two types of vouchers for GST purposes:
These vouchers can be redeemed for a broad range of goods or services. An example would be a $50 gift card that can be used across all locations of a supermarket chain.
Key GST rules:
Example: A customer buys a $100 gift card from your store. The card can be used to purchase any item in the store.
Important exception: If you sell a face value voucher for more than its stated value (e.g. $55 for a $50 voucher), GST must be accounted for on the extra amount ($5) at the time of sale.
These vouchers are tied to specific goods or services. For instance, a $100 voucher for a particular spa treatment.
Key GST rules:
Example: Your day spa sells a $150 “Relaxation Package” voucher that covers a specific 1-hour massage.
If a face value voucher expires or is never redeemed, the unredeemed amount will need to be recognised as income in your business. You will also need to include the GST portion (1/11th of the unredeemed amount) in your next Business Activity Statement.
Your business may be eligible to claim GST credits when purchasing vouchers, but timing matters:
Remember, GST credits are only available for purchases used in your business and must be GST-inclusive.
Proper record keeping is essential. You should maintain:
Also, if a voucher is redeemable for both taxable and non-taxable items, you may need to apportion the GST. And when a voucher is redeemed, issuing a tax invoice to the customer and keeping a copy is often necessary.
The GST treatment of vouchers can be nuanced, and it’s easy to overlook important details. Make sure your business has clear processes in place and consult with your tax adviser if you’re unsure about how to apply the rules.
Accurate reporting on your BAS and solid record keeping will help keep your GST obligations on track.