One of our clients is contemplating reactivating their gift certificate program. They used to have gift certs years ago, and are still carrying a small liability (a couple of thousand $$) for uncashed gift certs.
They stopped actively promoting the program in part at least because of the admin/bookkeeping demands. (I didn’t ask how it was doing as a revenue generator.)
I haven’t started to dig into the legalities yet… my understanding, to be confirmed, is that gift certs are treated as the equivalent of cash. Therefore, they never expire, and you have to be able to track whose cash you have on account — forever. Also, when you sell them you don’t charge GST/HST: the customer is trading the cash in their wallet for a different form of cash, and it’s the final *purchase* that’s taxed.
The gift certs would be sold through box office software which tracks the patron detail. The bookkeeping is done by batch — i.e. no patron detail is kept inside the accounting software. We would plan to reconcile the total in the books to the total in the box office software — so the box office would be the source for any patron issues.
What if someone arrives with a $50 gift cert and buys a $45 ticket? Do you give them their ticket and a $5 bill? Or do you hang onto the unspent balance?
I guess one of the assumptions would be that you’ll always have unused gift cert $$ on your balance sheet. Under any circumstances would you ever write off any portion of unused gift certs?
Does anyone have experience with gift certs? Best practices or cautionary tales? Advice & comments appreciated!