Starting in late 2019 gift cards issued across Australia are to be regulated under a new law, giving customers a minimum three-year period with which to use them.
The Treasury Laws Amendment (Gift Cards) Bill 2018, passed last week, will impose compliance costs of $9.4 million per year as businesses update their systems to remain compliant while disclosing the revised gift card expiry dates.
While several options were presented, a three-year period was preferred as it presented the highest net benefit, with consumers having an appropriate period of time to redeem the balance.
Australian Retailers Association executive director Russell Zimmerman said that while many retailers were against the expiry extension, the decision would remove inconsistencies in gift card laws nationwide.
“Although the ARA were not impressed with the three-year extension, we called for an 18-month period for retailers to get rid of old stock,” Zimmerman said.
“Instead we were left with a 12-month transitional period, placing more strain on retailers already operating in an unstable environment.”
The new regulation extends to electronic gift cards as well, though does not include credit, charge or debit cards; public transport tickets; customer loyalty cards; and discount offers for advertising purposes.
Should a retailer supply a gift card with less than a three-year expiry date after the regulation takes place, a maximum penalty of $30,000 may be imposed for a body corporate, or $6,000 for persons other than a body corporate.
A similar legislation was passed in New South Wales in late 2017, with retailers at the time expressing some uncertainty surrounding the decision.
Lower taxes for SMEs fast-tracked
Zimmerman also noted the impact of the passage of the Lower Taxes for Small and Medium Businesses Bill 2018, which fast tracks the transition to a decreased tax rate for applicable businesses.
“Previously, all businesses with annual turnover of $50 million or less could expect to see their corporate tax rate slowly decrease over 10 years,” Zimmerman said.
The new legislation means the tax rate will drop to 26 per cent in the 2020-21 financial year, and 25 per cent in the 2021-22 financial year.
While this legislative change is a welcome one for small and family retailers, the ARA noted that it creates a two-tiered corporate tax rate and increases the burden of Australia’s already complex tax system.
“At 30 per cent for all businesses operating over the $50 million turnover threshold, Australia’s top corporate tax rate remains one of the highest in the developed world,” Zimmerman said.
Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.
