The GST treatment of a voucher depends on whether it is a Multi-Redemption Voucher (MRV) or a non Multi-Redemption Voucher (non-MRV), and whether it is sold by the issuer or intermediary.
On this page:
Multi-Redemption Voucher (MRV)
A voucher is considered an MRV for GST purposes if it meets all of the following conditions:
- The voucher is sold for a consideration (e.g. sum of money).
- The voucher gives a right to receive goods and services up to the value stated on or recorded in the voucher.
- The voucher must be presented or utilised to exchange for the goods and services acquired.
- The voucher must not make reference to the value or description of any particular goods or services to be redeemed (with the exception of prepaid calling cards). For example, a voucher for a kettle worth $100 is not an MRV.
Examples of MRVs
- Shopping voucher which can be used for purchases within a particular store or shopping mall.
- Stored value card which can be used to redeem goods or services from the same or different suppliers.
- Prepaid gaming cards with monetary value or gaming dollars/credits.
- Prepaid calling cards (including top-up value cards) with monetary value or talk-time.
GST treatment of MRV
Where Issuer of the MRV is also the Supplier
If you are both the issuer of the MRV and the supplier of the goods or services which can be redeemed using the MRV:
- Sale of the MRV: If you are able to track the redemption of the MRV and sell the MRV at or below its specified value (i.e. the monetary value stated on or recorded in the voucher), no GST has to be accounted for. If you sell the MRV above its specified value, you have to account for GST only on the excess value (e.g. a $100 MRV sold for $130, GST is accountable at 9/109 of $30). If you are unable to track the redemption, you have to account for GST on the consideration received from the sale, whether the MRV is sold at, below or above its specified value;
- Redemption of MRV: You have to account for GST on the specified value of the MRV (if the tax has not been accounted for at the point of sale) and any additional consideration paid by your customer to redeem goods/services;
- Expiry of MRV: You have to account for GST at 9/109 of the unredeemed amount. However, GST need not be accounted for if the MRV can only be used to redeem zero-rated, exempt or out-of-scope supplies, or if GST has already been accounted for on the consideration received at the point of the MRV sale.
Where the sale of the MRV is through an Intermediary
Where you act as an agent in selling the MRV on behalf of the issuer and earn a separate distribution fee (e.g. commission) from the MRV sale, you are treated as making a separate supply of service to the issuer. Therefore, you need to account for GST on the distribution fee.
Where you act as a principal in buying the MRV from the issuer and re-selling it to another person at a higher price, you have to account for GST on the margin earned in the accounting period when the MRV is sold.
The margin is calculated based on the total sales proceeds minus total purchase costs of the MRVs sold in the accounting period. If the total sales proceeds are lower than or equal to the purchase costs of MRVs, the margin is treated as nil (i.e. 0) and no GST is chargeable.
Sample Calculation
Total sales proceeds from 100 MRV @ $10 each | Less: Total purchase costs of 100 MRV @ $8 each | Margin earned |
|---|---|---|
$1,000 | $ 800 | $ 200 |
GST to be accounted for = 9/109 X $200 = $16.51
As GST is chargeable only on the margin earned, you cannot claim the GST incurred (if any) on the purchase of the MRV.
Non-Multi-Redemption Voucher (Non-MRV)
Any voucher that does not qualify as an MRV is referred to as a non- MRV for GST purposes.
Examples of Non-MRVs
- Voucher given away free.
- Product voucher for specific goods or services (e.g. voucher for a kettle worth $100, voucher for 8 facial sessions).
- Discount voucher which entitles the holder to enjoy a reduction in the price of a product or service.
Vouchers Given Away Free
At the Point of Giving
No GST is chargeable when a voucher (including product voucher, discount voucher, voucher with monetary value stated or stored) is given away for free.
At the Point of Redemption
1. When consideration is received
When consideration is received (e.g. customer pays you) for the supply of goods and services upon redemption of the free voucher, you have to account for GST on the consideration received.
Example: Consideration is Received
2. When no consideration is given for redeemed goods
When the voucher is redeemed for goods and no consideration (e.g. money) is received, you need to account for GST if the goods are worth $200 or more. When the goods are worth less than $200, you do not need to account for GST.
3. When no consideration is received for redeemed services
When the voucher is redeemed for services and no consideration is received, you do not need to account for GST.
Selling Product Vouchers
When you sell a product voucher which entitles your customer to specified goods or services from you (e.g. voucher for a kettle worth $100, voucher for 8 facial sessions), the sale is treated as a supply of that goods or services.
The payment received is a non-refundable pre-payment for the goods or services to be supplied. Therefore, you need to account for GST when the voucher is sold.
No GST is chargeable when the product voucher is redeemed for goods or services later.
Selling Discount Vouchers
When you sell a discount voucher which entitles your customer to enjoy reduction on the purchase price of goods or services, you need to charge GST on the consideration received from the sale of the voucher.
When the voucher is later used to obtain a discount on the purchase of goods or services, GST is chargeable on the discounted price (i.e. gross value less discount) of the goods or services purchased.