Trade promotions: What’s the difference between a permit and authority?
Trade promotions and giveaways like LMCT Plus* have become a popular way for businesses to promote their business. The widespread appeal of winning prizes can generate excitement amongst existing and potential customers. However, many businesses are unaware that these types of competitions can legally require an authority or permit to be run. This article summarises the law on trade promotions and the difference between a permit and authority.
*Gladwin Legal has no association or affiliation with LMCT Plus
What is a trade promotion?
A trade promotion is a competition or giveaway that is conducted to promote the goods or services of a registered business. Trade promotions are a ‘game of chance’, where the winner must be randomly selected. This is contrasted with a ‘game of skill’, where the winner is selected by merit, for example, because the entrant had the most creative answer on where they would travel with the prize money.
Trade promotions come in different forms and are an increasingly popular marketing tool amongst businesses. A well-known example of a trade promotion Macca’s Monopoly, where people can enter the competition by purchasing participating menu items and scanning their tickets. In Australia, LMCT Plus is also a popular trade promotion which requires entrants to purchase a membership to enter the competition to win cars and other prizes.
What is the difference between a permit and authority?
Each state and territory in Australia has a different regulator for trade promotions. Generally, you must apply to the relevant regulator notifying them of your intention to run a trade promotion and providing the required information and documents, such as terms and conditions of your competition. If the regulator approves of your notification, you will receive a unique identifier such as a number or code to run your trade promotion. In most states and territories, this identifier is called a permit, but in NSW it is called an authority. Many states and territories require you to display your permit number wherever your trade promotion is conducted or advertised, for example on your business website or on your competition terms and conditions.
When do I need a permit or authority?
Businesses will need a permit or authority to run their trade promotion depending on the location and total prize amount of their competition, as set out below.
- New South Wales: You will need an authority if your prize value is $10,000 or over.
- Australian Capital Territory: You will need a permit if your prize value is $3,000 or over.
- South Australia: You will need a permit if your prize value is $5,000 or over.
- Northern Territory: You will need a permit if your prize value is $5,000 or over and you do not already have a permit in another state or territory.
You do not need a permit where your trade promotion is conducted in Tasmania, Victoria, Queensland or Western Australia. However, you will still need to comply with the requirements of the relevant Regulators, such as specific lodgement rules or provisions in your Competition Terms and Conditions.
What else do I need to run a trade promotion?
Importantly, a permit is only one aspect of running a legally compliant trade promotion. Businesses must also ensure they have the correct legal documents in place to protect their business. We have compiled a brochure which details all the legal documents you need and the related costs for running a trade promotion.
Key takeaways
- A trade promotion is type of promotion that is used to promote the goods or services of a registered business, where the winner is selected by chance or skill.
- A permit or authority is a unique identifier for your trade promotion, in the form of a number or code.
- In NSW, the identifier is called an authority, whereas it is called a permit in other states and territories.
- Permits and authorities are only one part of running a legally compliant trade promotion, and businesses must ensure they have the correct legal documents in place.
Gladwin Legal are experts in competitions and trade promotions and have extensive experience in advising businesses. If you require assistance in applying for permits, drafting competition terms and conditions or understanding your legal obligations, please contact us at or 1300 033 934.
This article was written by Ruth Ong.