actual cab fare charged to your credit card account?

[oz_mark]

I've had a cabcharge account for over 10 years. I prefer to use vouchers as it saves a minute or two at the end of the ride.

They always charged a 10% commission. When GST came in there was something called a GST equalization factor which (to cut a long story short) meant the amount effectively paid was still around the 10%.

About two years ago they gave up on such smoke and mirrors and now charge 10% inclusive of GST.

I remember seeing tha equalisation thing but never quite understood what they were tring to do with it.

 

[NM]

But because of the way Cabcharge are calculating things, a portion of the GST is being paid on GST.

I beg to differ. GST is charged on a service provided, and there are two services being offered and hence two instances of GST charged.

• Taxi ride is a service and attracts 10% GST on the fare
• Cabcharge processing is a service and attracts 10% GST on the service fee

Cabcharge set their service fee to be 10% of the amount they process through the credit card. Their cost structure has two components - a variable amount charged by the CC/banks as a percentage of the transaction amount, and their fixed overheads (labour, infrastructure etc).

This is no more charging a tax on a tax as it is to consider that the taxi fare includes a component to cover the fuel excise, GST on taxi cab purchase, GST on taxi cab maintenance etc, and yet the fare still attracts GST because it is paying for a service.

If you don't like paying it, then pay with cash. My company insists that we always use corporate credit card for even the shortest taxi ride in Australia. This is partly because our corp credit card transactions are automatically uploaded into our expense system and it makes processing and tracking expenses much easier. They are not concerned with the processing fee (plus GST).

The only issue I have with the service fee + GST is that I believe the service fee should be quoted including the GST and hence should be displayed as being 11% service fee (including GST).

I cannot understand why GST is added for Cabcharge transactions involving credit cards and it is not added to Cabcharge transactions through the Cabcharge system (paper or plastic Cabcharge accounts).

 

[oz_mark]

I beg to differ. GST is charged on a service provided, and there are two services being offered and hence two instances of GST charged.

• Taxi ride is a service and attracts 10% GST on the fare
• Cabcharge processing is a service and attracts 10% GST on the service fee

Cabcharge set their service fee to be 10% of the amount they process through the credit card. Their cost structure has two components - a variable amount charged by the CC/banks as a percentage of the transaction amount, and their fixed overheads (labour, infrastructure etc).

So we end up paying a service fee on a tax?
(While I don't like the idea, it is still better than what goes on in some overseas hotels with all the add ons that happen no matter how you pay the bill)

This is no more charging a tax on a tax as it is to consider that the taxi fare includes a component to cover the fuel excise, GST on taxi cab purchase, GST on taxi cab maintenance etc, and yet the fare still attracts GST because it is paying for a service.

Not that familiar with the intracacies of the GST system, but aren't them paying for maintenance etc. on the other side of the equation to them (input credits or something)

If you don't like paying it, then pay with cash. My company insists that we always use corporate credit card for even the shortest taxi ride in Australia. This is partly because our corp credit card transactions are automatically uploaded into our expense system and it makes processing and tracking expenses much easier. They are not concerned with the processing fee (plus GST).

I have the same issue but for personal expenses I don't like paying the 11%.

The only issue I have with the service fee + GST is that I believe the service fee should be quoted including the GST and hence should be displayed as being 11% service fee (including GST).

Agreed.

I cannot understand why GST is added for Cabcharge transactions involving credit cards and it is not added to Cabcharge transactions through the Cabcharge system (paper or plastic Cabcharge accounts).

Maybe its not a service when you use the cabcharge system.

I think we are basically 'on the same page', with a slight difference of view in one area, but you get that.

 

[serfty]

...

I cannot understand why GST is added for Cabcharge transactions involving credit cards and it is not added to Cabcharge transactions through the Cabcharge system (paper or plastic Cabcharge accounts).

Maybe its not a service when you use the cabcharge system.

I think we are basically 'on the same page', with a slight difference of view in one area, but you get that.

Taxi Fares are metered at a GST inclusive rate. i.e. The amount on the meter includes GST.

As I posted above the Cabcharge imposed "Service Fee" includes the GST; here's how:

I quote from a recent Cabcharge statement:

IMPORTANTANT NOTES:

l. The GST payable for input tax credit
purposes is 1/11th of the taxi fares GST
inclusive.

>> GST component on Taxi Fares for
purposes of Input Tax Credit is $ 9.25

This is for a period with $101.80 worth of metered fares which are GST inclusive.

So for that month, taxi fares before GST were $92.55. Add to that figure the GST of $9.25 and you get $101.80. For this month the service fee was $10.18 making up the statement total of $111.98.

The service fee is actually composed of $9.26 for the taxi fares (before GST) and $0.92 for the GST charged on the taxi fares.

So in Summary:

Base Taxi Fares (no GST)               : $ 92.55
GST on Taxi fares                      : $  9.255
Cabcharge Service fee on base taxi fare: $  9.255
Cabcharge Service fee on GST component : $   .92

Total                                  : $111.98

So yes, those facilities that are charging 11% are being less than honest.

 

[oz_mark]

So in the case of Cabcharge the 10% service fee is added on at the time they generate the statement, rather than directy at the taxi?

 

[serfty]

So in the case of Cabcharge the 10% service fee is added on at the time they generate the statement, rather than directy at the taxi?

Yes! (at least with vouchers)

 

[NM]

The service fee is actually composed of $9.26 for the taxi fares (before GST) and $0.92 for the GST charged on the taxi fares.

No, the service fee is based on 10% of the total amount of what Cabcharge are processing. They don't care that part of the amount that is to be billed to the credit card is the GST component that the taxi driver has to pay to the ATO. For a metered fare of $11, they pay the taxi driver $11. Cabcharge are not sending the taxi driver $10 and the ATO the fare GST component of $1 - it's the taxi driver that has to pay the $1 to the ATO.

So Cabcharge is processing $11 for the taxi driver, and adding a 10% fee onto that amount for the service they provide. Remember that Cabcharge are the CC merchant and are being charged a percentage service fee from the CC companies. That amount may be something like 1.5% for Amex or Diners, probably less for Visa and MC. The CC company does not say the fare was only $10 (plus GST) so we will only charge you the 1.5% service fee on the pre-GST amount even though we process the full $11. So why should Cabcharge only charge the service fee on one component of the transaction amount. The fact that the taxi driver has to send $1 of the transaction to the ATO has nothing to do with Cabcharge.

So, yes, you are paying a service fee on the transaction amount, which includes GST. And yes, you then have to pay GST on the service fee. I am comfortable with that. That is how GST works.

Personally I think an 11% (including GST) service fee is very high for large fares, but apart from making it more complicated (such as flat $5 plus 1.5%, where the 1.5% covers the variable component of the merchant fee), I think the current structure is as good as we can expect.

 

[oz_mark]

So Cabcharge is processing $11 for the taxi driver, and adding a 10% fee onto that amount for the service they provide. Remember that Cabcharge are the CC merchant and are being charged a percentage service fee from the CC companies. That amount may be something like 1.5% for Amex or Diners, probably less for Visa and MC. The CC company does not say the fare was only $10 (plus GST) so we will only charge you the 1.5% service fee on the pre-GST amount even though we process the full $11. So why should Cabcharge only charge the service fee on one component of the transaction amount. The fact that the taxi driver has to send $1 of the transaction to the ATO has nothing to do with Cabcharge.

Sometimes when something is explained a little different it all becomes clearer. I understand the GST on the service fee now :idea:

 

[serfty]

No, ...

Que? My statements show amoung other items, images of the vouchers, the total of these vouchers and a 10% service fee calculated on that total. Use my previous example; for a voucher total of $101.80 a $10.18 fee is charged. This is the sum of $9.26 and $0.92.

So Cabcharge is processing $11 for the taxi driver, and adding a 10% fee onto that amount for the service they provide. Remember that Cabcharge are the CC merchant and are being charged a percentage service fee from the CC companies. That amount may be something like 1.5% for Amex or Diners, probably less for Visa and MC. The CC company does not say the fare was only $10 (plus GST) so we will only charge you the 1.5% service fee on the pre-GST amount even though we process the full $11. So why should Cabcharge only charge the service fee on one component of the transaction amount. The fact that the taxi driver has to send $1 of the transaction to the ATO has nothing to do with Cabcharge.

I never posted that "Cabcharge only charge the service fee on one component of the transaction amount", in fact I posted they charge it on the metered amount, which has two components, fare + GST on fare.

... So, yes, you are paying a service fee on the transaction amount, which includes GST. And yes, you then have to pay GST on the service fee. I am comfortable with that. That is how GST works. ...

There is a lot more to it than that in the case of Cabcharge; there was some intense lobbying between the Government and Cabcharge when GST first came in. This resulted in the Equalisation Factor. This was originally -5.5% and applied to the metered fare before calculating the service fee. Subsequent lobbying occurred and about a year later it was changed to -4.5% and finally dropped in 2003.

It IS interesting that the statements provide a figure for input tax credits based ONLY on the non GST component of the metered fare. There is no figure provided for the service fee.

 

[ioki]

thanx a million to everyone's inputs on this topic.

my original issue with cabcharge wasn't the 11% charged, it was the fact that "11%" was not visible at all on that little piece of paper i sign on, i just had another look into a past expense report and the piece of tear away bit just has "10% service fee applicable on statement" across the top of it.

is showing 11% too much to ask for? =p

 

[JohnK]

thanx a million to everyone's inputs on this topic.

my original issue with cabcharge wasn't the 11% charged, it was the fact that "11%" was not visible at all on that little piece of paper i sign on, i just had another look into a past expense report and the piece of tear away bit just has "10% service fee applicable on statement" across the top of it.

is showing 11% too much to ask for? =p

I agree with you. Obviously too much to ask for. Just clever marketing. Downright cheating.

On one side is printed "10% SERVICE FEE APPLICABLE ON STATEMENT". This is the side you see the most as it has all the relevant trip details. Clever marketing at play :?:

On the other side is printed "10% SERVICE FEE APPLICABLE ON STATEMENT ATTRACTS GST ON ALL CARD TYPES EXCEPT CABCHARGE CHARGE CARDS".

 

[NM]

On the other side is printed "10% SERVICE FEE APPLICABLE ON STATEMENT ATTRACTS GST ON ALL CARD TYPES EXCEPT CABCHARGE CHARGE CARDS".

So can anyone explain why GST applies to all transactions except Cabcharge Chrage Cards? I would have thought that was just as much a "service" as processing a Visa/MC/Amex/Diners/JCB/VideoEasy card.

 

[kristo1]

Yes, there WAS a competitor for Cabcharge a few years ago, it was "Taxi Credit".
It faded away, as its costs where to high and could not compete with Cabcharge.

Keep in mind Cabcharge has unusual expenses that other similiar companies do not have. For example, what if a drunk person gets into a cab and pays the driver using a credit card. The signature is not quite right as he is pissed.
He gets his statement 2 months later and doesnt even remember going out that night.
He disputes the transaction and is credited as the signature is not right.
Who either looses or has to spend considerable time communicating with a taxi driver who often does not speak English or has left the taxi industy/country!

 

[Dave Noble]

Yes, there WAS a competitor for Cabcharge a few years ago, it was "Taxi Credit".
It faded away, as its costs where to high and could not compete with Cabcharge.

Keep in mind Cabcharge has unusual expenses that other similiar companies do not have. For example, what if a drunk person gets into a cab and pays the driver using a credit card. The signature is not quite right as he is pissed.
He gets his statement 2 months later and doesnt even remember going out that night.
He disputes the transaction and is credited as the signature is not right.
Who either looses or has to spend considerable time communicating with a taxi driver who often does not speak English or has left the taxi industy/country!

I doubt that cabcharge lose in this case; I would be surprised if they don't just refuse to pay the cab driver the amount that they owe them in trhis situation.
Dave

 

[JohnK]

On the other side is printed "10% SERVICE FEE APPLICABLE ON STATEMENT ATTRACTS GST ON ALL CARD TYPES EXCEPT CABCHARGE CHARGE CARDS".

So can anyone explain why GST applies to all transactions except Cabcharge Chrage Cards? I would have thought that was just as much a "service" as processing a Visa/MC/Amex/Diners/JCB/VideoEasy card.

Not sure NM that is what I would like to find out.

The above statement only appears on one side of the receipt and has multiple meanings. I think their meaning is "10% SERVICE FEE + GST APPLICABLE ON STATEMENT ON ALL CARD TYPES EXCEPT CABCHARGE CHARGE CARDS".

Notice the phrase "card types". Can someone please tell me if you pay taxi by debit card (note not credit card, therefore should not have fees) if you still get charged the 11%? And why? Nice little money spinner there when you don't have to pay credit card company a maximum of 1.5%.

I still maintain that it is clever marketing and should not be allowed. I only ever pay them by card if I don't have enough cash on me. Rip-off merchants.

 

[thadocta]

I still maintain that it is clever marketing and should not be allowed. I only ever pay them by card if I don't have enough cash on me. Rip-off merchants.

Just remember that it is not the cabbie who is getting this surcharge, but ScabCharge. If you are the type who would ordinarily tip the cabbie, then do so in cash (not on the charge) as putting it on the charge means that ScabCharge will get 11% on top of the tip as well.

Alternatively, pay cash and give the 11% to the cabbie.

Dave

 

[serfty]

On the other side is printed "10% SERVICE FEE APPLICABLE ON STATEMENT ATTRACTS GST ON ALL CARD TYPES EXCEPT CABCHARGE CHARGE CARDS".

So can anyone explain why GST applies to all transactions except Cabcharge Chrage Cards? I would have thought that was just as much a "service" as processing a Visa/MC/Amex/Diners/JCB/VideoEasy card.

Ok, I have found the reason.

The Cabcharge service fee is considered to be the same type of creature as a bank fee (such as a $10 monthly business account fee) and hence does not attract GST.

I went back to my filing cabinet and dug out the Cabcharge file. (I keep all notes and letter of those with who I or my business has a relationship in case I need them.)

In there was a letter from Cabcharge, dated 3 days before GST commenced. I have omitted irrelevant parts of it.

27 June 2000

......................................................GST and Cabcharge

Dear Cabcharge Customer,

The letter is to bring you up to date on issues relating to Cabcharge and the GST

ABN Number

Our ABN number is 99 001 958 390


Cabcharge Service Fee does not attact GST

Because the Cabcharge service fee is considered a financial transaction it does not attact GST.

The GST-Equalisation Factor

...

Non-Cabcharge Cards

Please note that, at this stage, this approach applies only to the use of Cabcharge cards and dockets. If you use a non-Cabcharge car though the cabcharge system, you should contact your card services provider regarding GST.

...

Yours Sincerely

...
Company Secretary

 

[JohnK]

Just remember that it is not the cabbie who is getting this surcharge, but ScabCharge.

I was referring to scabcharge as a rip-off merchant not the cab driver.

Alternatively, pay cash and give the 11% to the cabbie.

Dave

Most of the time I tip the cab driver if the service has been satisfactory.