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  1. #1
    Join Date
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    Default 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?
    Webzings Design
    Semi retired from Web Design

  2. #2
    Join Date
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    Default Re: Gift certificate and tax

    The answer really depends on your local laws, but the default assumption that Zen Cart uses is that the GV is just like cash.
    Please do not PM for support issues: a private solution doesn't benefit the community.

    Be careful with unsolicited advice via email or PM - Make sure the person you are talking to is a reliable source.

  3. #3
    Join Date
    Nov 2007
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    Default Re: Gift certificate and tax

    Quote Originally Posted by nigelt74 View Post
    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.

  4. #4
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    Default Re: Gift certificate and tax

    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.

  5. #5
    Join Date
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    Default Re: Gift certificate and tax

    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.
    Webzings Design
    Semi retired from Web Design

  6. #6
    Join Date
    Jan 2007
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    Default Re: Gift certificate and tax

    Quote Originally Posted by nigelt74 View Post
    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.

    Cheers
    Rod

 

 

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