The way taxi premiums are calculated has changed from 1 April 2018.
Taxis now have a choice to pay either a fixed annual premium or opt in for instalment payments.
Instalment payments are based on actual kilometres travelled whereas the fixed annual premium is based on average annual kilometres.
Having a usage based calculation of Green Slips for taxis is fairer when setting premium prices across all point-to-point services.
We have built a new online tool that can help you determine which option would work best for you.
Taxis are a Class 7 for setting of premiums.
The average annual premium for a taxi in the metro area (T plate) is $6400 and in country areas (TC plate) is $3800.
The premium includes:
- base premium
- cents-per-kilometre (based on average kilometres travelled in a year):
- 5 cents x 107,000 km per year to T plates
- 3.3 cents x 85,000 km per year for TC plates
- Class 7 Fund levy:
- $580 for T plates
- $680 for TC plates
- Input tax credit (ITC) loading of 7%†
- GST of 10%.
† Variable by insurers
Taxis with T plates that opt in to pay their premium in instalments can reduce their premium if they travel less than 107,000 km a year.
There is an upfront instalment, followed by two more instalments four months apart. At the end of the premium year there is a final adjustment.
The upfront instalment is one-third of the fixed annual premium and pays for 22,600 km.
The second and third instalment pay for 42,200 km.
Any adjustments to the previous instalment based on actual kilometres travelled are either credited or added to the next instalment.
The Fund levy, GST and tax input credit are inclusive.
The metro taxi illustration shows how a taxi that travels 90,000km over a year can save by opting in to pay in instalments.
Taxis with TC plates that opt in to pay their policies in instalments can reduce their premium if they travel less than 85,000 km a year.
There is an upfront instalment, followed by another instalment six months later. At the end of the premium year there is a final adjustment.
The upfront instalment is half of the fixed annual premium and pays for 27,000 km.
The second instalment pays for 58,000 km.
Any adjustment to the previous instalment based on the actual kilometres travelled are either credited or added to the next instalment.
The Fund levy for taxis, GST and tax input credit are inclusive.
The country taxi illustration shows how a taxi that travels 80,000km over a year can save by opting in to pay in instalments.
Class 7 Fund levy for taxis
The Fund levy is a flat fee paid by all CTP policy holders based on the class of vehicle and location where the vehicle is garaged. It pays for ambulance and hospital admittance, the Lifetime Care and Support scheme for the severely injured and for long term medical and treatment costs for people with serious injuries. It also pays for SIRA’s administration of the CTP scheme.
The Fund levy for taxis is a Class 7 which is higher than Class 1. As the CTP scheme is a risk-based insurance scheme, vehicles that have a greater number of injury accidents and a higher cost of injuries, pay a higher levy.
Taxis, particularly those operating in the Sydney area, have a greater number of injury accidents and the cost of those injuries is high. These accidents typically happen over a weekend with peak times being from midnight to 4am. Late afternoon and early evenings also see an increase in taxi accidents compared to other classes of vehicles.
We are working with the taxi industry towards better data collection and improved road safety in order to review the Class 7 levy and other ways to make taxi premiums more affordable.
How do taxi premiums compare to ride share?
Ride sharing companies have the technology that enables them to readily identify when the vehicle is being used for ride sharing purposes only and how many fare paying kilometres are travelled.
Taxis have a combination of booked fares and ‘rank and hale’ and at this point in time they cannot efficiently distinguish between all kilometres travelled and fare paying kilometres.
Ride sharing drivers pay a Class 1 premium like other passenger vehicles but from 1 April they will also pay a 10 cents-per-kilometre CTP component for fare paying kilometres travelled or 6.6 cents per kilometre if the journey started in a country region.
Taxis also pay cents-per-kilometre for CTP but this is for all kilometres travelled. This includes the kilometres travelled between fares and while driving around looking for passengers.
Taxis therefore pay a lower cents-per-kilometre than ride share – 5 cents for metro taxis and 3.3 cents for country taxis.
Introducing the cents-per-kilometre premiums for ride share and taxis is a step towards a fairer setting of premiums across all point-to-point services.
The way ride sharing premiums are calculated has changed from 1 April 2018.
From 1 April, for journeys starting in metro regions there will be a 10 cents-per-kilometre charge for CTP and 6.6 cents-per-kilometre for journeys that start in country regions. This only applies when the vehicle has a fare paying passenger.
Other than this, ride sharing operators will continue to pay a Class 1 premium like all other private passenger vehicles. This means they will continue to purchase their CTP Green Slip as usual.