Gift certificate and tax

Ok, do you apply tax to gift vouchers when selling them?

I am working on a site that is having GST (10%) added for local sales, but no GST for international orders.

All displayed price are inclusive of GST, but if you are from outside of the country (and logged in) you will see the non-gst price, so a $50 gift voucher would appear as costing $45.45 if it has tax set on it.

So should I set a tax class on gift vouchers, or just leave them tax free, as when they are used I assume the tax (if necessary) will be applied to the goods purchased and a gift voucher is another form of money.

Or am i just overthinking this?

The answer really depends on your local laws, but the default assumption that Zen Cart uses is that the GV is just like cash.

nigelt74:

Ok, do you apply tax to gift vouchers when selling them? ...

Simple answer: Treat your GV like cash - don't apply GST to the GV.

I agree... you wouldn't tax a gift voucher because you would be "double taxing" people. I don't think that is legal in most states in the USA.

Think of it this way:

When you sell someone a gift voucher, what you are actually doing is holding their cash in reserve for them. Granted, it is different than a bank because they can only spend the voucher in your shoppe, and they can't get their actual cash back from it...

BUT, if you think of the gift voucher accounts (in member's Account areas) as mini bank accounts, you will realize that banks don't tax the deposits that you make with them. So, why should and why WOULD you penalize your customers by double taxing them?

Hope this helps someone.

Cheers all, we aren't applying tax to the purchase of gift vouchers, I just needed to sound it out, as it made sense (not to apply tax) but that was in my own head and lots of things tht make sense in there dn't make sense in the real world.

nigelt74:

Cheers all, we aren't applying tax to the purchase of gift vouchers, I just needed to sound it out, as it made sense (not to apply tax) but that was in my own head and lots of things tht make sense in there dn't make sense in the real world.

FWIW, the Australian Tax laws are such that gift vouchers are the equivalent to cash, so GST isn't applicable.

You've done right both sensibly and legally.
:smile:
Cheers
Rod