Vouchers

The GST treatment of voucher depends on whether it is a Multi-Redemption Voucher (MRV) for GST purpose, and whether it is sold by the issuer or intermediary.

Multi-Redemption Voucher (MRV)

A voucher is considered as MRV for GST purposes if it meets all of the following conditions:

  1. The voucher is sold for a consideration (e.g. sum of money).
  2. The voucher gives a right to receive goods and services up to the monetary value or non-monetary value stated on or recorded in the voucher.
  3. The voucher must be presented or utilised to exchange for the goods and services acquired.

Must not make reference to specific goods or services

The voucher must not make reference to the value or description of any particular goods or services that may be redeemed under the voucher.

For example, a voucher that specifically makes reference to the redemption of a kettle worth $100 is not an MRV.

The only exception applies to prepaid phone cards.

  • Shopping voucher which allows choice of supplies on redemption
  • Stored value card which allows redemption for supplies from the same or different suppliers
  • Prepaid gaming cards with monetary value or gaming dollars/credits
  • Prepaid calling card (including the top-up value cards) with monetary value or talk-time
  • Voucher which are 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 discount on purchases only

Determining the Value of MRV

The value of MRV is referred to as "specified value".

When there is a monetary value stated on or recorded in an MRV, the specified value is the monetary value.

When the value stated on or recorded in the voucher is a non-monetary value (e.g. gaming credits/dollars, paid loyalty points), the specified value is the equivalent monetary value assigned by the issuer.

You sold an MRV with a specified value of $100 to your customer. Later, your customer presented the MRV to redeem $100 worth of product from you.

You need to determine whether the MRV is sold at, below or above the specified value and whether you are able to track the redemption of the MRV .

event1

Event 1: Sale of MRV with specified value of $100

 Can track the redemption of MRVCannot track the redemption of MRV  

MRV sold at specified value ($100)

No GST has to be accounted for.

You should not issue a tax invoice for the sale of MRV.

You have to account for GST at 7/107 on the consideration (e.g. sum of money) received from the sale of MRV.

  

MRV sold below specified value
(e.g. $90)

  

MRV sold above specified value
(e.g. $130)

You have to account for GST at 7/107 on the difference above the specified value.

E.g. GST = 7/107 x ($130-$100)

  

Event 2: Supply of $100 worth of product upon redemption of MRV

 Can track the redemption of MRVCannot track the redemption of MRV 

MRV sold at specified value ($100)

You have to account for GST at 7/107 on the supply of product based on specified value of the MRV ($100).

No GST has to be accounted for as you have accounted for GST when the MRV is sold.

 

MRV sold below specified value
(e.g. $90)

Generally, you have to account for GST at 7/107 on the supply of product based on specified value of the MRV ($100).

If you can track the consideration received from the MRV sale

You may account for GST based on consideration (e.g. sum of money) received. E.g. GST = 7/107 x $90

 

MRV sold above specified value
(e.g. $130)

You have to account for GST at 7/107 on the supply of product based on specified value of the MRV ($100).

 

Expiration of MRV

An MRV may expire before it is used to redeem for goods or services. For MRV expiring on or after 1 January 2010, you have to account for GST at 7/107 on the unredeemed amount when it is recognised in your Income Statement.

However, you are not required to account for GST on the expired unredee med amount if the MRVs can only be used to redeem for zero-rated, exempt or out-of-scope supplies.

You will also not be required to account for GST on the expired unredeemed amount if you have already accounted for GST when the MRVs were sold.

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 each accounting period when the MRVs are sold.

The margin is calculated based on the total sales proceeds minus total purchase costs of MRVs sold in each 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

$1,000

Less: Total purchase costs of 100 MRV @ $8 each

$ 800

Margin earned

$ 200

GST to be accounted for = 7/107 X $200 = $13.08

As GST is chargeable only on the margin earned, you cannot claim the GST incurred (if any) on the purchase of the MRV.

For more details and GST treatment of other types of transactions that involve MRV, please refer to our e-Tax Guide GST Treatment of Vouchers (292KB).

Non-MRV Vouchers

Giving Vouchers Away for 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
  2. 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.

    You give a $20 voucher to your customer for free. The voucher can be used in his next purchase. If he buys a bag priced at $100 and uses this voucher to offset his payment, the GST to be accounted for on the amount that your customer pays is 7/107 of $80 (i.e. $100 - $20 = $80).

  3. When no consideration is given for redeemed goods
  4. 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.

  5. When no consideration is given for redeemed services
  6. When the voucher is redeemed for services and no consideration is received, you do not need to account for GST as deeming of supply is not required for the provision of free services.

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 and services to be supplied. Therefore, you need to account for GST when the voucher is issued and 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 discount on purchases, you need to charge GST on the consideration received from the sale of the voucher.

When the discount voucher is later used to obtain a discount on the purchase of goods and services, GST is chargeable on the discounted price (i.e. gross value less discount) of the goods and services purchased.

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