GST On Gift Cards And Vouchers
Gift cards and vouchers are a common option businesses offer to add an extra revenue stream from customers. They allow you to receive money from the sale of your products before the product has been purchased. This makes them a great option for injecting more cash into the business, improving cashflow.
As more businesses are considering offering gift cards it is important to consider how GST works around gift cards. Knowing when to report the GST after you sell a gift card is important. Here is a run through of your GST obligations when you sell gift cards.
Reporting gift card sales
Knowing when to report the sale of a gift card on your Business Activity Statement (BAS) is important to remaining compliant with your business obligations.
When you sell a gift card or voucher you do not need to report the sale on your BAS. However, when the gift card has been redeemed you must report the full price of the sale including the value of the voucher if it has been fully redeemed, and any other payment received. You should report this at label G1 on your BAS for the reporting period the voucher was redeemed in, not the period it was sold in.
For those who use the accounts method to calculate the GST on sales, simply report the GST in the price of the sale at label 1A on your BAS.
Reporting gift card purchases
Sometimes you may purchase a voucher for your business and redeem it on business related purchases. Similar obligations apply regarding reporting as when a customer purchases a gift card from your business. That is, you do not report the purchase of the gift card, rather the redemption of it.
You will report and claim input tax credits in the reporting period you redeemed the voucher. The price you paid for the voucher should be reported under label G11 on your BAS.
If the purchase you made with the voucher was for business purposes, like normal purchases, you can claim GST tax credits. These would also be claimed after you have redeemed the voucher and on the price of the product you purchased. However, it is important that the product is for business purposes, if it is only partially then you must proportion the GST credit claim to align with the amount of business use.
Registering for GST
To claim GST credits on any purchase, even those with a gift card, you must be registered for GST. Registering for GST is easy with GSTRegister.com.au. All you need to do is fill out a simple form and we will handle the rest. As we are registered tax agents, we are able to ensure that your registration has been completed correctly before we submit it to the ATO, and we can answer any questions you may have. If you are unsure about registering for GST, and the obligations you will have, talk to one of our registered tax agents today.