Institute of Certified Bookkeepers
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November 2018 Question of the Month – Paying accounts in reward points

  • 125 posts
  • # 117324

My client uses barter group Capricorn Society Supplier accounts and has requested the rewards points (which are of a substantial value) to pay this month's account in full. How do I account for the payment?

  • 125 posts
  • # 117363

When an organisation awards you loyalty points it is not a taxable supply, and it is not consideration for services, so there is no GST impact and no bookkeeping/tax impact. When you redeem loyalty points for goods or services there is also no GST or accounting/bookkeeping/tax impact. If you buy points – for example if you pay cash for extra points – the points are a currency, and there is only a reallocation of value from cash into the value of points purchased. If you redeem points for cashback then there may be an accounting/bookkeeping/tax impact. If you would like to learn more about the income tax or GST implications click here to read our new resource.

Edited at 20 Dec 2018 01:05 AM GMT

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