VIC changes Cabcharge Surcharge

Effective 1st February 2014, the Victorian Government passed major reforms for its Taxi and Hire car industry. The reforms tackle many issues plaguing the system, most notably Cabcharge’s high surcharge on electronic payments of taxi fares. Electronic payments are classified as when a passenger uses anything except cash to pay for the taxi fare, such as payments via a credit card, or via Cabcharge’s own mechanisms of eTickets and FastCards.

As of 1st of February 2014 the maximum surcharge amount levied on electronic payments in Victoria drops from 10% plus GST to 5% inc GST.

Examples of how fares are calculated before and after the change.

Sydney (Surcharge of 10%) Melbourne (Surcharge of 5%)
Fare $100.00 $100.00
GST on Fare $10.00 $10.00
Subtotal with GST $110.00 $110.00
Cabcharge Surcharge ex GST $11.00 $5.00*
GST on Cabcharge Surcharge $1.10 $0.50
Total Fare $122.10 $115.50
Total GST $11.10 $10.50

*The actual surcharge is 5% of the Subtotal inc GST, which is $5.50.

This is great news for both Passengers and Drivers who have been voicing that the surcharge is excessive, unfair and that it is Cabcharge flexing its market dominance. It appears that the state of Victoria thought so too!

Cited as anti-competitive behaviour and unfair to passengers who choose to pay their taxi fare by electronic means, the Victorian Government took the first steps to correct this excessive surcharge. However it didn’t end there, they stated that depending on the outcome of further review they may lower the surcharge amount to below 5%.

Currently this reduction in the surcharge amount is only in affect in the state of Victoria, however the other Australian States and Territories have taken notice and are inquiring to see if they too can reduce the Cabcharge surcharge amount in their own states.

However there is still something that needs further clarification: how does the fare calculations look when you consider that if you pay using a Cabcharge FASTCARD or eTicket there is no GST on the Service Fee?

Sydney (Surcharge of 10%) Melbourne (Surcharge of 5%)
Fare $100.00 $100.00
GST on Fare $10.00 $10.00
Subtotal with GST $110.00 $110.00
Cabcharge Surcharge ex GST $11.00 $5.50
GST on Cabcharge Surcharge Zero Zero
Total Fare $121.00 $115.50
Total GST $10.00 $10.00

If this is the case, then corporate passengers in Melbourne pay the same whether they use Cabcharge or a credit card but have a smaller GST component. Either that or the GST Free surcharge on Cabcharge transactions will need to be something like 4.55%….

Please stay tuned to this space as we will be providing you with more information the moment we get some answers!

Update! As of Tuesday 8th April 2014, NSW Premier Barry O’Farrell and Transport Minister Gladys Berejiklian said they would also legislate the maximum surcharge for paying by Card for a taxi fare to 5%, down from the current 10%.

BIS’ Expense Management Solution iCMS has GST rules to automate the calculation of the correct GST amounts for transactions including corporate cards and Cabcharge . If you have any questions or would like us to demonstrate this functionality for you please contact us on 02 9387 2509.

Comments are closed.