Not going to take anything provided as financial advice, etc etc
Accountants of OzBargain:
If I were to buy (for example) a $100.00 JB Hi-Fi gift card for $95.00 and use it to pay for a work-related expense that I wanted to claim a tax deduction on.
Would I:
a) claim the cost of the gift card ($95.00), or
b) claim the value of the gift card ($100.00)?
It says to ask OzBargain
Generally speaking you'd be claiming whatever it says on your tax invoice or your item receipt you paid. Which tells ya how much GST you paid.
With JB Hifi, it'd be most likely the value of item you bought (so if you bought $100 item with $100 gift card, then you'd claim $100 refund)
Interesting, what if you were given the card? Of course then you wouldn’t really know how much was paid for it, and in essence, using it would mean you would have given up that value elsewhere.
No saying you can but it’s a scenario that article doesn’t address.
Interestingly for GST purposes you can only claim GST credits on when you spend the gift voucher. Can’t claim GST on the giftcard itself.
But you are claiming GST on the item not on the giftcard.
I think OP doesn't realise it is the final item that is work related not the gift card. If you want to claim a gift card ATO would be all over your returns like a bad rash.
If you want to claim a gift card ATO would be all over your returns like a bad rash.
You can claim the gift card so long as you can substantiate.
If you double dip you could be in trouble. It's like the pizza shop that claims the expenses but doesn't declare the cash…
You can claim the gift card so long as you can substantiate.
That you got a gift card? ATO will call you up then you'll have to explain how it turned into a business expense with whatever you used it for.
Why don't OP just claim tax invoice for the final item.
Just another story in people over thinking the process.
@netjock: Like I said - so long as you can substantiate.
Take a real estate agent for example - buys their client a gift card for recognition of continuous business. Totally deductible.
Take a real estate agent for example - buys their client a gift card for recognition of continuous business. Totally deductible.
haha I guess you can pick whatever shoe that fits. Recommend me a REA that gives gift cards rather than a crappy gift hamper. thanks.
An IT contractor can't buy gift cards and claim it is a laptop. You need to make it directly traceable but why don't OP just produce the JB invoice.
Then people can claim they paid their taxes with itune gift cards.
@netjock: Yea but you're not comparing apples with apples.
If an IT contractor buys gift cards then he'll have a hard time justifying it in comparison to an REA. However - if he uses a gift card to buy a laptop then that's fine.
The mischief lies where the likes of a REA buys a gift card, claims that, then uses the gift card himself to buy a laptop to claim that too. That won't be hard for an auditor though as chances are they'll ask for substantiation on the cards as well as expenses. If they see expenses paid for with gift cards you can bet your butt they'll want more info…
@bemybubble: Lets get back to the topic. Is OP a REA? Probably not. IT contractor maybe not.
We're just wasting our time.
I suspect it is buy a gift card and give to family, friends, scammer and use a JB receipt and try to pass off the expense.
So we need to keep our gift card receipts?
Not necessarily.
It’s what you bought that is actually tax deductible for your work, not how you got the money or method of payment.
This is the only answer OP needs.
Gift card is just the tender, deduction is substantiated by the receipt for purchase of item as if they paid with cash/cc
You claim the official tax invoice total that was paid to the company that supplied the goods/services/products to you as this is the official receipt for tax purposes.
How you physically paid for it is up to you. Cash, CC, bank transfer etc etc etc
You do not have to supply invoices for the Cash, CC, bank transfer etc etc etc, so nothing to see here so move along….
You will claim wait you paid for the item, regardless of the method of payment (gift card) or how you obtained the gift card.
I think the loophole is closed in that you are ment to claim all sources of income, so if you got extra money by buying a gift card (buy for $95 get $100, then $5 in extra income), or you get given a gift card (friend gives you the $100 gift card, then $100 in income)… then you are meant to claim this extra income and pay tax on it. I doubt anybody does though & I doubt the ATO would be interested in arguing about it.
Edit: But now I realise that gifts are taxable so idk really.
Both these statements are not correct.
A discount on the purchase of any item is never considered taxable income. Neither are things like cashbacks which is also considered as discounts. In both cases, you have not "earned" any "income". The seller of the item has merely sold you something at a lower price in order to encourage you to buy the item.
Secondly, a gift from a friend is also not taxable income. You have again not done any work for your friend and been paid an "income" for your work. He or she has given you the gift because they value your friendship.
Id claim the invoice
In the off chance you got audited and had to pay back the difference, so be it. Make sure you make a post on ozbargain when it does happen
Oh.. And no, I wouldn't tell the tax man about your cashback from cr/sb either.
HODL
No one deducts credit card points or cashback on card spend.
What do I put down as tax expenses if I paid last years tax debt with Apple gift cards?
You can't compare apples with JB's
From a legal perspective, you claim a deduction based on your cost for an item, so if you had discounted gift cards, the gift card outlay is your deduction
With that said, if audited, you would most likely rely upon the invoice to show the value of the claimed deduction. It would be difficult for the ATO to prove you paid less than the face value of the gift cards when making the purchase
Ultimately it is a matter for the individual making the claim as to how they would proceed, by the letter of the law, or on the basis of the documentation at hand
There are two parts to prove to be able to claim a deductible expense. It must be incurred to generate assessable income, and secondly it must be spend by the tax payer. So, if you have an invoice for an expense which is work related expense, but you are reimbursed by your employer. Then you cannot claim tax deduction on it. In this case you will find that the invoice will show payment method as gift card. Unless you are able to prove that you bought the gift card with your money, and used it for a deductible expense you may be denied deduction. Having said that if the amount where are talking here is insignificant you may get away with it.
That's not correct. Did you read the link above that clarifies the ATO's opinion on the matter?
The tax payer spent the money. The tender used was gift cards.
How they got the gift cards is irrelevant for this case. They might go to jail for stealing gift cards, but they are totally correct in claiming the deduction on the invoice amount.
If I use my birthday gift cards to make a deductible purchase, I am totally entitled to make that claim.
Unless the gift card receipt clearly shows the gift card number and matches to your final tax invoice paid with same gift card number I wouldn't.
What if the ATO walks into your house and basically says. How do I know the gift card wasn't used to pay any one of these other items from JB?
Not using the final tax invoice that relates to the item is just asking for trouble.
Hold on, op isn't wanting to claim the purchase of a gift card is he? He said he used the gift card to purchase a deductible item, and it is the amount on the tax invoice of the deductible item that he will claim.
Would I:
a) claim the cost of the gift card ($95.00), or
b) claim the value of the gift card ($100.00)?
I read he wants to claim the gift card.
I smell something fishy here. Sounds a bit like I buy gift card give it to my family, friends, scammer. Then I go and buy my JB item with cash and pretend that I paid for it with gift card.
Hahahhahahaa
Best part is OzB types are having mass debate about it.
I think you're right. :)
@SlickMick: Next forum post.
Business owner buys itunes gift cards to pay taxes, claim tax as expense or value of gift cards.
(I paid scammers and want to see what OzB opinion is claiming it against tax)
Huh? I thought my post was pretty clear.
I buy discounted gift card for 5% off (pay $95.00 for a $100.00 gift card). I buy a work-related item/expense with the gift card.
The receipt from JB Hi-Fi will say $100.00 but I paid $95.00 for the gift card.
Is my tax deduction:
- The $100.00 spent gift card value, or
- The $95.00 I paid for the gift card itself?
Is my tax deduction:
- The $100.00 spent gift card value, or
- The $95.00 I paid for the gift card itself?
None of the above.
You submit this:
receipt from JB Hi-Fi will say $100.00
All you are going to cause is:
ATO "Hi, I want to question this deduction for a gift card that you say is a work expense? Please confirm how a gift card relates to your job?"
You "I used it to purchase a work related item"
ATO "Please show us receipt that itemize the work related item which is relevant to your work"
Claiming a gift card is like me showing the receipt / photo for a bank check I am saying is for a HiLux (beceause I am a tradie… NOT… just an example), the ATO is going to want to see the HiLux. How do they know the bank check wasn't for a souped up Yaris GR?
The above was just us clowning around because you know most of the answer here are borderline entertaining.
@netjock: Just to clarify, when I said
Is my tax deduction:
- The $100.00 spent gift card value, or
- The $95.00 I paid for the gift card itself?
I didn't mean I would claim the receipt for the gift card itself, but submit the $100.00 receipt from JB Hi-Fi and if necessary, adjust the claim down to $95.00 for the actual amount I paid.
Thanks for the clarification.
Claim the cost of the gift card ($95.00) as that's what on the tax invoice BUT only if you are gifting it to someone that is related to your work e.g. clients, suppliers as a thank you gift as they are linked to producing income for you
Otherwise if you are buying the gift card to buy things related to work, then you wouldn't tax deduct the gift card you would tax deduct the item purchased on the gift card and pro rata business use vs private use if required
can be a bit dodgy because if you are buying something that is $100 but only cost you $95 but no one is going to call you up on it
What does the tax invoice for the work related item say?