Three new laws passed in the Senate last week will bring about some significant changes for retailers across pricing, gift cards, product safety and taxes – both good and bad.
A new law enforcing an expiry period on gift cards as well as legislation extending consumer rights under the consumer law and finally, a law giving small businesses a welcome tax cut will all have big implications for retailers.
Overall these news laws, passed in the Senate last Thursday, will bring a mixture of both welcome and potentially damaging changes, Russel Zimmerman, executive director of the ARA told Retailbiz.
Gift cards’ expiry period
Under new legislation, gift cards will now have a compulsory minimum three-year expiry period enforced as of late 2019 –a timeline that is unduly onerous, Mr Zimmerman said. The transitional period of 12 months is also too restrictive, he said, with the peak calling for a longer 18-month transitional period.
While a number of retailers oppose the legislation, it will, however, remove inconsistencies between States and Territories, he said.
“Although it’s not one we would have liked to have seen come up, it will reflect what’s happened in NSW. On balance it’s probably not a bad decision. I guess the biggest problem is that we would’ve liked an 18 month transitional period.”
This shorter transition period does risk placing more strain on retailers already operating in a tough environment and the peak will continue to lobby for exemptions to the law, Mr Zimmerman said.
The expiry period will mean retailers will need to keep outstanding gift cards as liabilities on their books for three years.
New requirements under the Australian Consumer Law will also have a big impact on retailers – with extensions on consumer guarantees, as well as changes to pricing rules and product safety.
The new reform will see consumers’ rights extended under the consumer law, with safeguards against price gouging, clarifications around consumer guarantees and changes to pricing regulations.
Retailers must now provide to consumers a single price which includes the price of pre-selected options such as tax, duties and booking fees, while optional extras can still remain separate.
Goods will now no longer be covered under the ACL’s consumer guarantees when they are in transit or storage in some circumstances.
The changes have also seen the ACCC’s powers extended, with the regulator now able to require retailers to pass on information about unsafe product including from suppliers.
The changes to pricing laws are welcome news, Mr Zimmerman said.
“As an example if someone goes to pay and when they go to pay they are told there is a $10 booking fee that kind of thing will be out. Those things are very good and will clarify for consumers.”
But Mr Zimmerman says he would have liked to see more of a pushback towards the manufacturers under the consumer law – something that wasn’t seen in the changes.
“We were hoping to see some action brought against suppliers, wholesalers or manufacturers when a retailer has to give a refund to a consumer. Sometimes there’s great difficulty in then getting a supplier to agree to make good on the goods returned.”
But the suite of changes does come with some welcome news for retailers, with a bill that will see the tax rate lowered for small business.
The cuts will see a tax reduction coming much sooner than expected, with businesses with a turnover of $50 million or less dropping 26 per cent in the 2020/2021 financial year and 25 per cent in the subsequent financial year.
While these changes are welcome, Mr Zimmerman says the $20 million threshold to meet the definition of small business should be increased.
“In relation to small business cuts obviously the ARA are very pleased but we would like to go further, beyond that figure. For a retailer with say 8-10 stores they may well come into the category that goes above $20 million. It would be nice to see small business larger than $20 million.”
The ARA has been consistently lobbying the Government to introduce support measures to help retailers through tough market conditions. But despite the cuts, Australia’s corporate tax rate remains significantly high compared to the rest of the world, Mr Zimmerman said.
“At 30% 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,” Mr Zimmerman said.