I can't believe I'm asking a tax question. I'm strangely proud.

October 4, 2007 12:59 AM

Why are Australian hire cars quotes GST exclusive?

My memory and cursory research indicate that it is illegal for companies in Australia to quote/advertise a price for a good or service exclusive of GST...so why do all the hire car companies do this?

I just went to book a hire car and, in addition to a whole lot of strange-sounding charges (administration recovery fee? say what?) the GST was added to the price advertised. This happens on at least the Hertz and Avis pages, and I'm assuming others.

Could some Australian tax whiz please tell me how they get around the rule? I asked the customer service guy on the phone and he immediately got very defensive. (And if it is illegal, bonus points for helping me report them!)

posted by Lucie to law & government (12 comments total)

They are required to either include the GST in the price, or state something like "+GST" - if there is no statement that makes it clear that GST is not included, they cannot charge it. It's pretty easy to include a * on the price and a small "+GST" at the bottom of the ad and meet the requirements, though.

It annoys the hell out of me when companies quote prices without GST when there is no possibility of an exemption. I assume it is done merely to quote a lower price based on a belief that people can't figure out the total price (often, sadly true I suspect).

If the hire car company is not making it clear that GST is not included and are adding it on anyway, you should call them on it and try and get the hire for the stated price. Keep a copy of the ad just in case. Better still, can you post/link the ad here so the MeFi detective brigade can sniff around? I've just been through the Web sites of both Avis and Hertz and they seem to be pretty up-front about including GST in their calculations, as far as I can see.
posted by dg at 2:57 AM on October 4, 2007

Sounds like shit to me too. If true (not casting aspersions!), I am pretty sure this is totally not kosher.
posted by Wolof at 3:30 AM on October 4, 2007

I thought so!

An example is on hertz.com.au. If you just put in any details (I just put in SYD as the airport code and didn't change anything else), it takes you to the 'choose car' page, which has the fist car as $58 in big, bold font. It's only when you choose the car and go to the 'book' page, which IMO is the equivalent of a checkout, that it has a 'total' price. And even that doesn't explicitly state the added GST - rather, it has a small link to 'rate details', as shown here:

Your Quote
You have selected a Ford Falcon Sedan or similar
Full-Size 2-4 Door
1 day at 58.00 AUD
With Unlimited Free Kilometers
Total Including Approximate Charges: 83.67 AUD Rate Details

Total Approximate Charges Include:
Tax, Airport concession fee recovery, Vehicle registration recovery, Admin Recovery,
Charges are in AUD
Approximate rental charges are based on available information at the time of reservation for renters age 25 and older. For renters under age 25 an additional daily age differential charge applies, see "Rental Qualifications and Requirements" link below to the right for details. Additional fees or surcharges may be applied at time of rental.

It's only when you click on the 'rate details' link that it takes you to this information:

Base amount:
Daily: 1 Day at 58.00 AUD
Unlimited Free Kilometers
Rate Code: SLD1
Additional Items (included in Approximate Total Charges)
Tax 10.00 %
Airport concession fee recovery 18.00 %
Vehicle registration recovery 4.99 AUD
Admin Recovery 3.00 %


I think it looks really, really dodgy. Surely having the GST as a hidden extra like this is not allowed?
posted by Lucie at 4:21 AM on October 4, 2007

Well, it's not technically hidden, is it? They just don't include it in the first place they mention the price. A bit dodgy, sure, but probably not illegal.
posted by dg at 4:40 AM on October 4, 2007

Here in NZ companies either don't pay GST or somehow claim it back. So often things which are aimed at commercial users quote 'GST exclusive' prices, with the justification that this is the price the company will end up actually paying. Computers are the main one that springs to mind and hire cars would fit that category (a lot of companies will be hiring cars for their staff).

However, it's usually a pretty big stretch, e.g. computers set up for games or multimedia and sold direct to the public are so not going to be used commercially, and is fairly obviously done so that they can advertise a more tempting looking price. My personal feeling is that this is what your hire car companies are doing. But as long as it tells you that the price is GST exclusive and lets you know the full price before you pay then it's probably legal.

You could possibly look into this a bit further though. Air New Zealand got done over here for not tacking on service fees until the checkout section of their webpage and now have to include everything in the up front price. I'm sure there are subtle distinctions in the laws between countries so this example won't directly transfer across, but it does show that even a long time advertising practice can be changed if people complain. The place to go would be who ever is in charge of your advertising standards and consumer affairs, as this is a case of misleading advertising more than anything. You can probably submit a complaint without too much trouble then they'll look into it. Not sure if that will help you get the price you want for this hire (and you should totally negotiate with them on this), but could help change the overall practice.
posted by shelleycat at 4:17 PM on October 4, 2007

In Australia, companies submit either monthly or quarterly returns called Business Activity Statements. In overly simple terms, they add up the GST they have paid, subtract the GST they have collected and either pay or are paid the difference. It's not that they don't pay the GST, it's that they get a credit for it against tax they have collected.

You should try complaining about the GST being added on late in the process and see if it gets you anywhere. If it really bugs you, complain to the ATO here. They can't do anything about it unless someone complains. At the least, stating that you intend to complain to the ATO unless they waive the GST should get you some action from the hire company.

Don't forget to update here with what happened!
posted by dg at 5:13 PM on October 4, 2007

Well, I just reported it to the ACCC, who said that it might be a section 53 (of the Trade Practices Act) violation.

Thanks for your help and opinions, everyone :)
posted by Lucie at 5:23 PM on October 4, 2007

Cool! Glad to be of assistance. See what happens when you word your AskMe questions properly?

;-)
posted by dg at 6:25 PM on October 4, 2007

Oh no, the real magic happens when people answer the actual question that was asked. :)
posted by Lucie at 7:55 PM on October 4, 2007

I just want to respond to this:

It's pretty easy to include a * on the price and a small "+GST" at the bottom of the ad and meet the requirements, though.

That doesn't meet the requirements:

Make sure you state:

    • the full cash price, e.g. ‘$550’

    • the full cash price and additional information, e.g. ‘$550 (including GST)’ or ‘$550 (including $50 GST)’

    • all components of the cash price, and totalling them to the full cash price, e.g. ‘$500 plus $50 GST = $550’

    • all components of the cash price, e.g. ‘$500 plus $50 GST’.

Make sure you don’t state:

    • only one component of the price, e.g. ‘$500’

    • one component part of the price, plus an unspecified amount, e.g. ‘$500 plus GST’

    • a price with an asterisk qualifier in a non-prominent place, separate from the headline print, detailing additional compulsory amounts payable, e.g.‘$500*’
posted by robcorr at 12:55 AM on October 5, 2007

One dealing I've had with an Australian company that really annoyed me was with a online retailer selling video hardware... They're terms say:
"...prices in this Catalogue include GST. "

So when ordering from New Zealand, I'd expect to pay 10% less. But that was not the case, when I queried it I was told that they charge a 10% surcharge for overseas orders.
posted by sycophant at 1:39 AM on October 5, 2007

I am prepared to bet this is because the booking engine is in the USA and the local tax is added based on the country where the car is.
Further, I will also bet it is a mainframe application designed purely for the american market in the early eighties that has been expanded for international use, and pre-dated the GST requirements.
posted by bystander at 3:31 AM on October 8, 2007