For a face value voucher (a gift card with a stated dollar value that can be spent on a reasonable range of things), you generally don't report GST when you sell it. You report GST when it's redeemed for taxable goods or services. For a non-face value voucher (redeemable only for a specific thing, like one massage), GST is reported when you sell it. Memberships and class packs usually aren't vouchers at all, so GST is reported when you're paid or invoice, like any other prepayment.
Key takeaways
- Face value vouchers: no GST at sale (unless sold above face value). GST when redeemed, on whatever taxable items are bought.
- Non-face value vouchers for a specific service: GST at sale, if the service is taxable.
- Unredeemed or expired face value vouchers: when you write the balance back to income, you make an increasing adjustment of one-eleventh.
- Memberships, class packs and prepaid plans are generally prepayments for services, not vouchers. GST is reported when paid or invoiced.
- Gift cards sold to consumers since 1 November 2019 generally need a 3-year minimum expiry, a displayed expiry date and no post-supply fees.
Gift cards, vouchers and memberships are some of the best tools a small business has. A cafe sells gift cards at Christmas. A day spa sells a "pamper package" voucher. A yoga studio sells 10-class packs and monthly memberships. All of them bring cash in before the customer shows up.
GST is where they differ. The ATO has a specific set of rules for vouchers, in Division 100 of the GST Act, and they don't work the same way as the rules for an ordinary prepayment. Get them mixed up and you'll report GST in the wrong quarter, or forget it entirely on the gift cards nobody ever spends.
This guide is written by BPAG Accountants and reflects the ATO's guidance as at October 2026. It assumes you're registered for GST.
What counts as a voucher for GST?
The ATO describes a voucher as a token, coupon or similar item with a stated monetary value that can be redeemed for goods or services. Its examples include physical and digital gift cards, retail store vouchers and prepaid phone cards.
Then it splits vouchers into two types.
| Face value voucher | Non-face value voucher | |
|---|---|---|
| What it is | Redeemable for a reasonable range of goods or services, up to its stated value | Redeemable only for specific goods or services |
| Example | A A$100 gift card for any treatment or product at a salon | A voucher for one 60-minute massage |
| GST at sale | Not a taxable supply (unless sold for more than face value) | Yes, if what it's redeemable for is taxable |
| GST at redemption | Yes, on the taxable goods or services supplied | No, already reported |
| Breakage | Increasing adjustment of 1/11 when written back to income | Already reported at sale |
Face value vouchers: GST when redeemed
When you sell a face value voucher at or below its face value, the ATO says the sale isn't a taxable supply. You don't report GST then.
Instead, you report GST when the customer redeems it, based on what they actually buy. The ATO's own example: a supermarket sells a A$20 gift card. The customer later spends it on a A$15 frying pan (taxable) and A$5 of strawberries (GST-free). GST is reported on the frying pan only.
That's fair, because when you sell a general gift card you don't know what it'll be spent on.
If you sell a voucher for more than its face value, GST applies to the excess at the time of sale.
Non-face value vouchers: GST when sold
A voucher that can only be redeemed for specific goods or services is a non-face value voucher. You account for GST when you sell it, as long as what it's redeemable for is a taxable supply. If it can only be redeemed for GST-free or input-taxed supplies, there's no GST.
So a "one massage" voucher sold in November has its GST on the BAS that includes November, even if it's used in March.
Unredeemed vouchers and breakage
Some gift cards are never spent. That's called breakage.
For face value vouchers that expire or aren't fully redeemed, and where you've written the unredeemed amount back to income in your accounts, the ATO says you make an increasing adjustment equal to one-eleventh of the unredeemed balance. You report it at label 1A on your BAS.
The ATO's example: a cafe sells a A$100 voucher valid for 12 months. The customer spends A$67 before it expires. When the cafe writes the A$33 back to income, it makes a A$3 increasing adjustment (one-eleventh of A$33) on that BAS.
Two practical points:
- Track your outstanding vouchers. You need a register of what's been sold, redeemed and expired. Most point-of-sale systems can produce one.
- Breakage is income too. Writing unredeemed balances back to income has an income tax effect as well as a GST one. Treat it consistently each year.
Memberships and class packs are usually not vouchers
This is where subscription businesses most often get confused.
A 12-month membership isn't a voucher. There's no stated monetary value to be spent on a range of things. It's a supply of a right or service over a period. GST is attributed under the ordinary rules: generally in the BAS period you receive payment or issue the invoice (on a non-cash basis, whichever comes first).
A 10-class pack for A$250 is similar. Whether it's treated as a non-face value voucher or an ordinary prepayment for services, the result is the same: GST is reported when you're paid or invoice, not as classes are attended.
A stored-value credit, like "A$100 account credit you can spend on anything we sell", can look much more like a face value voucher. If you sell credit that customers draw down across a range of products, check whether the voucher rules apply.
A gift membership ("give three months of membership") is usually redeemable for a specific service, so if it's treated as a voucher at all, it's likely to be non-face value, and GST is reported at sale.
A worked example: a yoga studio
A GST-registered studio on a non-cash basis sells four things in November:
| Product | Price (incl. GST) | Treatment | GST on November's BAS |
|---|---|---|---|
| A$100 gift card, spend on anything | A$100 | Face value voucher | A$0 (reported when redeemed) |
| "One private session" voucher | A$110 | Non-face value voucher | A$10 |
| 10-class pack | A$250 | Prepayment for services | A$22.73 |
| 12-month membership paid upfront | A$1,320 | Prepayment for services | A$120 |
In February, the gift card holder spends it on a A$90 class and a A$10 water bottle. Both are taxable, so A$9.09 of GST (one-eleventh of A$100) goes on February's BAS. Nothing was reported for it in November.
The lesson: classify each product when you set it up in your point-of-sale or booking system, not at BAS time.
Income tax: a separate question
GST timing doesn't decide when the income is taxable. For income tax, prepaid amounts for services not yet provided may not be derived until earned, depending on your accounting method and whether there's a contingency of repayment. For an accruals taxpayer, breakage written back to income is generally income when written back. Get advice on the income tax timing of gift card sales. We cover this in prepaid subscription income and tax.
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The consumer law side: gift card expiry rules
If you sell gift cards to consumers, the Australian Consumer Law also applies. For gift cards bought on or after 1 November 2019, the ACCC says:
- They must generally be redeemable for at least 3 years.
- The expiry date must be prominently displayed (or the card must say it doesn't expire).
- You generally can't charge post-supply fees, such as activation, account-keeping or balance-inquiry fees.
There are exemptions, among others reloadable cards, promotional giveaways, cards valid only for a set period, genuine discount cards, and loyalty or employee reward cards. If you sell gift cards, check the ACCC guidance and set your expiry to at least 3 years by default.
Your checklist
- List every prepaid product you sell: gift cards, vouchers, packs, memberships, credits.
- Classify each one: face value voucher, non-face value voucher, or ordinary prepayment.
- Set the GST code in your point-of-sale or booking system to match.
- Keep a voucher register showing sold, redeemed, expired and outstanding.
- Make the breakage adjustment when you write unredeemed balances back to income.
- Check your gift cards meet the 3-year expiry and display rules.
- Get advice on anything that doesn't clearly fit one box.
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Frequently asked questions
Do you charge GST on a gift card in Australia?
For a face value gift card that can be spent on a range of goods or services, you generally don't report GST when you sell it (unless you sell it for more than face value). You report GST when it's redeemed, on the taxable items bought. For a voucher redeemable only for a specific service, GST is generally reported when you sell it.
What is a face value voucher?
A voucher with a stated monetary value that can be redeemed for a reasonable range of goods or services up to that value, such as a store-wide gift card. A voucher that can only be redeemed for specific goods or services is a non-face value voucher.
What happens to GST on gift cards that are never used?
For face value vouchers that expire or aren't fully redeemed, when you write the unredeemed amount back to income you make an increasing adjustment of one-eleventh of that amount on your BAS, at label 1A.
Is a class pack a voucher for GST?
Usually not. A class pack is generally a prepayment for specific services with no stated monetary value to spend on a range of things. GST is reported when you're paid or invoice, under the ordinary attribution rules. Check how your pack is structured if it works like store credit.
How long must a gift card be valid in Australia?
Gift cards bought by consumers on or after 1 November 2019 generally must be redeemable for at least 3 years, with the expiry date displayed prominently. Some cards are exempt, including reloadable, promotional and loyalty cards.
Important: This is general information only, current as at 29 October 2026. It is not tax, legal or financial advice and doesn't take into account your objectives, financial situation or needs. Tax law is complex and changes often, and the right answer depends on your facts. Before acting, get advice from a registered tax agent. BPAG Accountants can help: bpag.net.au or 1300 272 422. Where we quote thresholds and rates, check the linked ATO source for the income year that applies to you.
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Written by BPAG Accountants
This guide was written by the tax team at BPAG Accountants, a Sydney accounting firm that helps Australian business owners with tax, structuring, cash flow and business advice. Reviewed by Robert Coorey, a Director at BPAG and author of The Subscription Playbook. Talk to BPAG on 1300 272 422 or at bpag.net.au.
Sources and further reading
- ATO, GST and vouchers (updated 3 September 2025)
- ATO, Are you applying GST correctly for vouchers? (small business newsroom)
- A New Tax System (Goods and Services Tax) Act 1999, Division 100 (Federal Register of Legislation)
- ATO, Choosing an accounting method (GST cash and non-cash)
- ACCC, Gift cards and discount vouchers
Sources checked 29 October 2026. Spotted something out of date? Tell us.