Per km travel charge for plumbing work, and GST

1

What is a reasonable per km charge for travel to a plumbing job?

My strata received an invoice for some work done to shift the inlet on our dam. Along with parts and labour the total includes TRAVEL PER KM (CAR) $1.818 x 150.

Three things bother me about this.

  1. GST was applied to the whole bill, including the travel. Is this right? I tried the ATO site but couldn’t see whether GST applies to a travel charge.
  2. The invoice says 150 km. Google Maps and I agree that it’s more like 118 km.
  3. What’s the standard charge for travel? $1.82 per km seems excessive.
2

Mileage charges will be based on the the hourly rate of the tradie, plus a vehicle rate (assuming time wasn’t charged separately). A rate of $1.82 may be reasonable, and its scale not dissimilar to say a taxi fare.

Distance travelled will also include visit to a plumbing supplier for parts as well, so the distance will be more than the shortest distance between say the plumber’s base and the work location.

The automotive associations have prepared vehicle only costs which can be found here:

These costs may surprise many as tradie type vehicles can cost around $20k per year.

And yes, GST applies to vehicle mileage as it is part of the provided service. Vehicle mileage isn’t a GST exempt item.

The Fair Work Australia website has some useful information for the electricity industry on how vehicle mileage is calculated as a employer reimbursement:

https://library.fairwork.gov.au/viewer/?krn=K600061

This provides some background to type of costs which can be reasonably incurred.

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3

It’s a round number. Unlikely to be the measured distance travelled, although it could be close depending on as @phb the actual travel required. Whether a near guess or an approximation from the odometer to simplify the bill calculation one can ask how the plumber determined it was a fair assessment.

The unknown here is what it actually costs the plumber. If they do fewer kms per year total (<10,000km) it will be more expensive compared to another business with a higher use vehicle (20,000km). As a business the plumber can only claim tax deductions based on actual cost. If one had a $100,000 bill and 10,000km of travel charged one might argue the cost and push for the plumber to justify the cost based on the prior tax return. However it might take a serious legal action to get to the facts.

If one did not get with the quote an agreed rate for travel distance and time it will be more difficult to argue. Especially if the travel time was not included in the labour cost. Note if there was a call out fee though this is intended to part cover some time and travel distance. Double dipping on travel without a discount for the call-out may be unreasonable, as would claiming a high cost for travel by distance if also adding the travel time to the time billed.

P.S.
The strata’s we have been involved with have always required multiple quotes. A learning curve if the quote was not comprehensive?

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Google’s not always up to date, and their shortest-distance route isn’t always the best, so I wouldn’t take 118km as the precise distance travelled. As this was an invoice for work done, rather than a quote, I would say that they might have had to take a longer route on that particular day - to get around roadworks, and/or as @phb suggested, to pick up needed supplies.

ATO’s fixed rate method for an individual claiming car expenses is 85c per km. If anything, that’s probably an underestimate of real vehicle running costs.

If you take that as the vehicle cost, the business has in effect allowed $97/hr for the tradie’s time while they drove to and from the site.

Which may be a bit less than a full per-hour labour charge. According to https://www.plumbingcosts.com.au/how-much-do-plumbers-charge-1, current plumbing fees across Australia and NZ are $130-140/hr.

On the whole, I’d say $1.82 per km is reasonable and 150km could be accurate.

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5

Do you not think its a bit late to question the bill from the plumber after he has done the work? Sure the charge may be outrageous, but it was entirely possible to ask a few plumbers their charges before getting one out to do the work.
In any case, if you deem the charge to be excessive, you cant do anyhting about it. You have engaged the plumber and he has done the work. You have to pay his bill. If you dont he will just take you to court (and win)

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6

This.

I think the lesson for the OP is that when getting quotes it is necessary to ask about whether travel is charged for and if so how.

Have you seen petrol prices lately?

Overall that doesn’t look outrageous to me.

That’s a good starting point.

I think the ATO has been reluctant in recent years to adjust that rate for the true cost - because that costs them more in deductions and hence in revenue. So, like you, I would say that the true cost is more than 85c/km.

Of course it depends on the details of the vehicle. Since most tradies use utes and since Albo has declared war on the ute (or so they tell me :rofl:), expect the true cost to continue to rise. Utes are expensive to insure etc. because they are “commercial” vehicles.

The ATO distance rate purports to include all the costs of owning and operating the vehicle (although obviously it is only updated once a year and hence may not reflect a spike in petrol prices or other price increases until the end of the tax year).

The ATO rate has become less realistic over the years because it no longer takes into account the engine capacity of the vehicle. Likewise it does not accurately capture how the fixed cost component in the rate is lower if the number of km travelled is higher (other than that you can’t use the cents-per-kilometre method if you do more than 5000 km and want to claim the full distance).

As has already been pointed out, a tradie is entitled to add to the vehicle cost a charge for his or her time - and the time could reflect the nature of the drive to the place where the job was carried out (e.g. was it a burn along the motorway or a crawl with bumper to bumper traffic).

Not disagreeing with your conclusion, but another way to look at it is … if the tradie is registered for GST then GST applies. Period. Because nothing that the tradie supplies is exempt from GST. Exactly how the final bill is broken down doesn’t really matter. GST applies.

As an example, bottled water is exempt from GST. The tradie needs to keep hydrated while he does your job. He consumes 2 bottles of water. Does he itemise those bottles of water on the bill and exclude GST from those items? No. They shouldn’t be on the bill at all. The tradie didn’t supply those bottles of water to you. He used them in the course of carrying out your job. A myriad of vehicle expenses could be considered the same. They are input costs. The tradie deals with the suppliers of those inputs as to whether GST does or does not apply, and claims the GST back anyway when GST was paid. None of that has any relevance to his supply to you and whether GST applies to that supply.

It goes without saying that GST should only appear at all if the tradie is registered for GST and has mentioned the ABN on the “Tax Invoice”.

So to summarise …

Only the distance looks a bit iffy. I would have a polite conversation with the tradie as to how this figure has been arrived at - particularly if your strata might generate significant work for the tradie in the future. Otherwise let it go.

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