Gift card liability

Gift card liability is the total balance of gift cards sold but not yet spent, which a business owes its customers and records as a liability rather than as revenue.

Selling a gift card brings in cash but no revenue yet. Revenue is recognised as the card is spent on goods or services. Balances that expire under the card’s terms are released under the applicable accounting rules.

Worth knowing

• A card balance should never go below zero; a larger bill is split across payment types.
• Each card needs its own number so its balance can be traced.
• Ask your accountant how VAT applies to gift cards you sell.

General information, not tax or legal advice. Check the official source and speak to a registered tax agent about your own situation.