At this time of year our retail clients, in particular, sell gift vouchers to Christmas shoppers which can be exchanged for good or services. However, we have found the correct tax treatment of these voucher sales are often misunderstood.
When selling a gift voucher it is important to know when to report the GST for the gift voucher on your Business Activity Statement.
If you sell a gift voucher which can be redeemed for a choice of goods or services up to that value, you report the GST for that gift voucher when the gift voucher is redeemed, not when the gift voucher is sold.
If only part of the gift voucher is redeemed, you only need to report the GST on that part.
However, if the gift voucher is for a specific product or service, you report the GST when the voucher is sold.
Similarly, if you buy a gift voucher and use it to obtain something that is a taxable supply to you, then you are entitled to an input tax credit for the goods or services you obtain with it (i.e. if that purchase is used in your business). However, you don’t claim the credit unless you redeem the voucher for a taxable supply.
