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Standard fact sheet.
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Large print fact sheet.

Changes to gift card expiry dates and fees 

Information for business 

The NSW Government has introduced a mandatory minimum expiry period of 3 years for gift cards and gift vouchers sold to a consumer in NSW, as well as a ban on post-purchase administration fees.

The changes aim to strike a fairer economic balance for consumers and businesses in the gift card market. The reforms give consumers access to the full value of their gift card over a reasonable period of time, while maintaining a workable business model for traders.

Does this apply to gift vouchers as well as gift cards? 

Yes. Information on this page should be read as applying to both gift cards and gift vouchers.

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Three-year minimum expiry date 

The new law sets a mandatory minimum expiry date of 3 years for most gift card products. The expiry date can extend beyond 3 years and no time limit cap applies.

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Can I still charge an administrative or issuing fee? 

Businesses are still entitled to charge an administration/issue fee at the time the gift card is purchased. However, once the card has been issued, there is a ban on any fee associated with redeeming the gift card that would reduce the value of the card – such as activation fees or account keeping fees.

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When will the changes commence? 

The reforms will start on 31 March 2018.

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Will there be a transitional period? 

Yes, there will be a transitional period of some months from 31 March 2018.

A Statement of Regulatory Intent is expected to be issued in late January 2018. It will provide guidance for businesses on the interim arrangements applying to the sale of pre-printed gift card stock and other matters.

It would be prudent for new orders of pre-printed stock to carry terms consistent with the 31 March requirements. 

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What about gift cards sold prior to 31 March 2018? 

Any gift card sold prior to the commencement of the new law on 31 March 2018 is not required to comply with the reforms. The existing expiry period, as well as other terms and conditions that applied to the card when it was sold, will still apply. However some businesses have already implemented the 36 month minimum expiry date, or no expiry date, for their cards.

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What is included and what is excluded from these reforms? 

Some gift cards are excluded from the reforms. The table below is a quick guide to what is and is not included in these reforms. Note: This list is indicative of the major product groups. A complete list is expected by late-January 2018.

Table 1 – Types of gift cards included/excluded in the reforms

Gift card type

Included?

A gift card redeemable for goods or services purchased in a NSW store. Yes
Gift cards purchased by a business for the purpose of giving them to staff or a customer in a normal gift giving situation. Yes
A gift card that has been purchased online and the address given by the customer was in NSW only. Yes
A gift card purchased online where no address is provided. Yes
A card or voucher exchanged for goods returned to the supplier of the goods. No
Prepaid cards for phone or internet services.  No
Debit cards, credit cards, prepaid travel cards and other similar cards that are issued by financial institutions. No
Cards supplied as part of a customer loyalty program. No

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Accounting for gift card liabilities longer than 12 months 

Generally speaking, a minimum 3-year expiry date on gift cards will mean that it may take longer to account for revenue from the sale of gift cards. This is because gift card revenue is usually accounted for when a gift card is redeemed or expired. Similarly, the records of financial liabilities resulting from gift card sales may need to be maintained for a longer period of time.

However, there is currently no uniform accounting standard for gift cards, so the impact of gift card reforms on your businesses may vary depending on your accounting practices. In certain circumstances, businesses can account revenue from unredeemed gift cards earlier than the minimum 3-year expiry date.

Contact your accountant or the Australian Taxation Office for advice.

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Will small businesses have to comply too? 

Yes. The only exception is for the gift cards types that are excluded from the reforms.

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What if I sell gift cards online or over the phone? How will the reforms apply to these sales? 

If your business is based in NSW and you sell gift cards online or over the phone, it is more than likely these reforms will apply.

The reforms apply to gift cards sold to a consumer who is in NSW at the time of sale or sold to a consumer who provides a NSW address in connection with the sale.

Cards sold to consumers who provide any address at the point of sale that is outside NSW are not required to carry a 3-year expiry date.

Unless you are certain and can demonstrate that the customer resides outside NSW, it is safer to assume the customer is NSW-based and therefore the gift card they purchase from you is governed by these reforms.

Table 2 – Quick reference guide for gift cards purchased online

Gift Card is purchased online or over the phone

Covered?

NSW address for delivery and NSW contact details are provided Yes
Interstate contact/address details and NSW delivery details are provided No
NSW contact details but interstate delivery address are provided No
Only a NSW contact address provided Yes
Only a NSW delivery address provided Yes
No contact or delivery address are provided Yes
International websites only a NSW billing address provided Yes
International websites only a NSW delivery address provided Yes
International websites any contact or delivery address provided are not in NSW No

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What if I sell a gift card to someone in another state or if the person is from another state? 

If a visitor from another state or territory buys a gift card while they are in NSW and the gift card can be redeemed for goods or services in NSW, the reforms will apply to the card or voucher sold to them.

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Penalties for non-compliance 

A breach of the new laws could attract a penalty infringement notice of $550 and result in a maximum penalty of $5500.

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Honouring gift cards issued under the previous ownership 

If the business you are now the owner of is a "going concern" (able to pay its debts when they are due, and continue to operate without any intention to liquidate or wind up operations for at least the next 12 months) then you are required under the Australian Consumer Law to honour existing gift cards purchased under previous ownership of the business.

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