When Australia introduced a minimum three-year expiry for most gift cards, many businesses focused on the obvious cost: a longer period in which the voucher might return for redemption.
That concern is understandable. A longer validity period can extend the life of the outstanding obligation and may delay the point at which some unredeemed value can be recognised under the business's accounting policy.
But the rule also changed the product. An ordinary paid gift voucher with years to use feels safer to buy, easier to give and less likely to create an argument later.
The useful question is not whether the rule is good or bad. It is how to design a voucher program that works well inside it.
This article is general information, not legal or accounting advice. Recognised exceptions exist, and your accountant or lawyer should confirm unusual voucher models.
What the rule says
Gift cards supplied to Australian consumers on or after 1 November 2019 generally must remain redeemable for at least three years after supply. The expiry must be displayed prominently, and post-supply fees cannot reduce the redeemable balance.
The regulations contain recognised exceptions, including some promotional, loyalty, employee, reloadable, genuine-discount and specified-period vouchers.
For an ordinary paid gift voucher, the practical starting point is simple:
- three years is the minimum, not the target;
- a longer period or no expiry is permitted;
- the expiry needs to be visible; and
- an exception should be identified deliberately rather than assumed from a marketing label.
A longer validity period can reduce purchase friction
Gift buyers are making a promise on someone else's behalf. They do not know exactly when the recipient will be ready to book, travel, dine or shop.
A short expiry creates another decision: will the recipient use it in time?
A visible three-year period removes much of that pressure. It does not guarantee a sale, but it makes the product easier to understand and easier to give confidently.
That can matter particularly for:
- appointment businesses where the recipient needs to find a suitable date;
- accommodation and experiences that involve travel or seasonality;
- restaurants and classes that are booked for an occasion; and
- buyers who live away from the recipient and cannot help organise redemption.
The expiry wording can therefore be part of the customer promise rather than fine print:
Valid for three years from issue. Choose the right time to use it.
The obligation lasts as long as the voucher does
A longer validity period also means the records need to last.
The business should be able to identify:
- when the voucher was supplied;
- its original and remaining value;
- each partial or full redemption;
- the applicable expiry policy;
- refunds, replacements and deliberate extensions; and
- the outstanding balance at any reporting date.
That is the real operational cost of a long-lived voucher: not the date printed on it, but the need to preserve a reliable ledger for years.
Breakage is an accounting conclusion, not a sales strategy
AASB 15 describes unexercised customer rights as breakage. Where a business expects to be entitled to breakage and can support the estimate, it may recognise expected breakage proportionally as customer rights are exercised. Otherwise, it recognises the amount when further exercise becomes remote.
The three-year consumer-law rule and the accounting conclusion are related, but they are not identical:
- consumer law determines the minimum period in which the voucher remains redeemable;
- the voucher history shows what remains outstanding; and
- the accountant determines when revenue-recognition criteria are met.
A valid expiry can be important evidence, but the objective should not be to maximise forgotten balances. A healthy voucher program makes redemption easy and accounts properly for whatever remains.
Use redemption cohorts to plan the business
The most useful analysis is your own redemption pattern.
Group vouchers by issue month or quarter and track how quickly the original value is redeemed. That curve can help the business understand:
- when service demand is likely to arrive;
- when reminder emails may be useful;
- whether some voucher offers create more redemption friction than others;
- how long the material outstanding tail persists; and
- whether the accountant has enough reliable history to consider expected breakage.
Do not import a generic industry percentage and call it your policy. Your own customers, voucher mix, reminders, locations and redemption experience determine the pattern.
Practical choices to make
Use at least the legal minimum where it applies
Old six- or twelve-month templates should not be copied forward for ordinary paid gift vouchers.
Decide whether a longer period supports the brand
Four years or no expiry can be a deliberate customer promise. It also extends the recordkeeping and service obligation, so the choice should be explicit.
Price named services for the full redemption window
A voucher tied to a particular service or package may be redeemed much later. Consider how price changes, inclusions and substitutions will be handled before the voucher is sold.
Put the expiry where people can see it
Display it on the voucher and other customer-facing views. If there is no expiry, say so clearly.
Make redemption easier than dispute resolution
A balance-check path, clear staff workflow and complete event history reduce the risk of an old voucher turning into an argument.
How VoucherGrid helps
VoucherGrid keeps the issue date, expiry policy, balance and event history together. Ordinary paid vouchers cannot be given an invalid short expiry by accident, while recognised exceptions require deliberate configuration and supporting terms.
The platform maintains the outstanding balance and ageing evidence. It does not decide the merchant's legal or accounting position; the business and its advisers remain responsible for applying the correct exception and recognition policy.
The one thing to action
Pull up the vouchers you currently sell and ask:
Is the expiry a customer promise we can explain confidently, and can our records support it for the whole period?
If the answer to either part is no, fix the system before the next busy season.
