Wollongong City Council provides refunds, free sports day for GST overcharge

24 October 2000

"In July, Wollongong City Council rounded the effect of the GST above 10 per cent on a number of its services, including room bookings, waste disposal services and the use of sporting facilities", ACCC Chairman, Professor Allan Fels, said today.

"After complaints about the price increases for sporting facilities and waste disposal, the ACCC investigated the council's post-1 July 2000 price calculations.

"It found the council had used incorrect rounding methodology of GST-inclusive prices. The council applied the 10 per cent GST to the services that it provided which were subject to the GST, and then rounded these amounts up above the 10 per cent.

"After discussions with the ACCC, the council immediately reduced the prices for services where the incorrect methodology had been used. It agreed to take the following corrective steps:

  • provide refunds to all consumers who were overcharged who are identifiable, for example consumers who hired function rooms;
  • offer a free sports day on 5 November 2000 at each of the Beaton Park Leisure Centre, Lakeside Leisure Centre and Illawarra Regional Athletics to compensate casual users of these facilities who were overcharged;
  • publish a half-page notice in the first five pages of the Wollongong Advertiser to notify consumers of the free sports day at the centres; and
  • put A3 sized Notices, seven days before the free sports day, in prominent locations at each centre, to advise consumers of the free sports day.

"The council will provide free access to a range of sporting facilities including tennis courts, squash courts, swimming pools, gymnastics. This is a positive outcome for consumers as it allows some compensation for casual users in circumstances where ordinarily refunds are impossible.

"The ACCC is satisfied with corrective steps being taken by the council to compensate consumers who were overcharged. In deciding on an appropriate resolution the ACCC's paramount concern is to ensure that a full refund is provided".

"The ACCC has received a number of complaints about other organisations which may have rounded up the effect of the GST above 10 per cent on their prices. Although the effect of such rounding on individual consumer transactions may be small, the net effect of such rounding can lead to consumers paying significantly more for services over the longer term. Such rounding is contrary to the ACCC's Price Exploitation Guidelines.

"The ACCC calls on other organisations which may have rounded up the effect of the GST on the prices of their goods or services, to immediately review their pricing and take appropriate corrective action".

Release number: 
MR 281/00
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