Florists and specialty gift retailers combine a perishable inventory problem, a product-level GST classification challenge, a gift voucher accounting obligation, and — for event florists — a revenue recognition question that can span several months. Each of these demands more careful treatment than the standard retail setup.
GST on Flowers, Gift Products and Mixed Hampers
Cut flowers occupy an unusual position in the GST Act. Under s.38-4, "food" includes "plants" — and cut flowers are plants. The ATO's GSTR 2013/1 confirms that a bunch of cut flowers is a GST-free supply. Fresh-cut foliage (greenery, fern, eucalyptus stems) is also GST-free on the same basis.
However, the GST-free treatment does not extend automatically to everything a florist sells:
- Dried flowers and silk flowers: not fresh plants, therefore taxable supplies.
- Vases, pots and containers sold separately: taxable.
- Chocolates, wine and specialty food items: follow their own GST classification (wine is taxable; most basic food is GST-free).
- Gift hampers containing mixed items: where a hamper is a composite supply, the ATO's GSTR 2001/6 on mixed supplies applies. If the dominant supply is a GST-free item, the entire hamper may be GST-free — but for most florist hampers containing wine, chocolates, and flowers, the GST-free and taxable components must be separated and the GST calculated on the taxable portion only.
For florists using a POS system, each product line must be correctly classified as GST-free or taxable at item level. Applying a blanket taxable or blanket GST-free classification will produce systematic BAS errors.
Delivery charges, even where the flowers being delivered are GST-free, are a separate taxable supply. A $15 delivery fee for a GST-free bunch of flowers is still a taxable supply of a delivery service. The invoice should show the GST-free flowers and the taxable delivery as separate line items.
Perishable Inventory and the NRV Write-Down
Floristry inventory is one of the most perishable in retail. Unsold cut flowers typically have a shelf life of 5–10 days, after which their net realisable value (NRV) is nil. Under AASB 102 (Inventories), inventory must be carried at the lower of cost and NRV.
A florist who purchases $800 of flowers on Monday and carries $200 of that stock forward to the following Monday must write the residual stock down to NRV (typically zero for wilted or deteriorating product). Failure to write down perishable inventory at period end overstates the inventory asset on the balance sheet and understates the cost of goods sold in the income statement.
The practical bookkeeping approach for florists is a weekly inventory count and write-off cycle:
- Count remaining saleable stock at the end of each week.
- Write off unsaleable stock to "Inventory write-down — perishables" expense.
- Carry forward only the value of stock that could realistically be sold at full price.
This discipline also supports accurate gross margin tracking. A florist who does not write down perishables will report a higher gross margin than the business actually earns, creating unrealistic benchmarks for pricing decisions.
Gift Cards and Vouchers: Issued, Redeemed and Unredeemed
Gift vouchers and gift cards are a feature of virtually every florist and gift retailer. The GST and accounting treatment follows a two-stage model:
On issue: The sale of a gift card is not the supply of goods or services — it is the sale of a right to acquire goods in the future. Under the ATO's GSTR 2003/5, the issue of a gift voucher is not a taxable supply. No GST is remitted on the cash received when the card is sold. The proceeds are held as a contract liability (deferred income) on the balance sheet.
On redemption: When the voucher is redeemed for a taxable supply (flowers, a gift hamper, a vase), that redemption triggers a taxable supply. GST is calculated on the redemption amount and remitted in the BAS period of redemption.
Breakage (unredeemed vouchers): Under AASB 15, where an entity holds unredeemed voucher liabilities that it does not expect to fully discharge (because some customers will never redeem), it must estimate the breakage component and recognise it as revenue over the redemption period. The breakage estimate is based on the entity's historical redemption data. For most small florists, this is a minor amount, but it should be reviewed annually rather than treating unredeemed vouchers as a permanent liability.
Wedding and Event Contracts: Revenue Recognition
Large event floristry — weddings, corporate dinners, hotel lobbies — typically involves:
- An upfront deposit (20–50% of the contract value), collected at booking.
- A progress payment at a milestone (floral design sign-off, material ordering).
- A balance on the day of the event.
Under AASB 15, the florist's performance obligation is the delivery and installation of the floral arrangements at the event. That obligation is satisfied when delivery and installation occur — typically on the event date. Revenue is recognised at that point, not when deposits are received.
Until the event occurs:
- Deposits received are contract liabilities (deferred income), not revenue.
- If the client cancels before delivery, the refundable portion of the deposit is returned; any non-refundable deposit is recognised as revenue at the cancellation date (representing the florist's compensation for preparatory work done).
A florist booking $18,000 of wedding contracts three months out for a busy spring season may have substantial deferred income on the balance sheet at period end. Confirming that revenue is recognised at delivery — not at cash receipt — is essential for an accurate P&L.
Supplier Discounts, Waste and COGS Accuracy
Flower markets and wholesale suppliers often apply volume-based pricing: early-morning bulk buyers receive a discount compared to late-arriving buyers. These discounts should reduce the cost of goods purchased, not be recorded as "other income." Similarly, wholesale supplier credits for damaged goods received reduce the cost of goods line.
The true COGS for a florist includes:
- Purchase cost of flowers, foliage, and sundries
- Freight from the wholesale market
- Water, preservative, and conditioning chemicals
- Packaging (cellophane, tissue, ribbon, boxes) — often overlooked
Packaging is a direct cost of the supply and should sit in COGS, not in general overheads. Benchmarking COGS as a percentage of revenue against industry norms (typically 35–50% for specialty florists) gives the bookkeeper and the client an early signal of margin erosion from waste, theft, or pricing pressure.