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ATO ruling on vouchers leaves some confusion

A TAX ruling designed to clarify the GST treatment of vouchers has left some uncertainty about the treatment of certain types of vouchers.

The Australian Tax Office, which issued the ruling this week, defined vouchers as tokens, coupons or similar articles that can be redeemed for a supply of goods or services.

Accounting firm Deloitte Touche Tohmatsu says the ruling delivers a mixed message. In particular, the ruling is unclear on the GST treatment of certain gift vouchers that are popular among retailers.

Deloitte Tax Services partner Anthony Cipriano said the ruling gave the view that if a gift voucher was donated or given away, no GST would be due at the time of issue or redemption.

“If a $5 gift voucher is given away, the ATO considers that there will be no GST on the redemption of the voucher, unless additional consideration is provided at the time of redemption,” he said.

“But the ATO has a different stance on face value vouchers which are sold for less than their face value. 

“Its view is that the GST should be calculated on the face value at redemption even though the amount of that face value was never received by the business.

“That is, if a $5 gift voucher is sold for $1 (as opposed to being given away), the GST at redemption will be calculated by reference to the full face value – in this case, $5 – and not the $1 value.”

Mr Cipriano said this might create complexities and confusion for many retail businesses that donated vouchers as well as sold them in bulk to other businesses.

Acting Tax Commissioner Michael D’Ascenzo said the ATO had consulted extensively with industry groups and tax professionals prior to the release of the ruling.

“Today’s ruling clarifies a number of areas including vouchers donated to charities and third party reimbursements,” Mr D’Ascenzo said. “The good news for charities is that vouchers donated to them by GST-registered businesses are not subject to GST.”

The ATO said it was continuing to work with industry, especially the phone card supply and distribution industry, on the GST treatment of products that were not regarded as vouchers for GST purposes.

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