Trade Practices Amendment (Clarity in Pricing) Bill
Who will this affect?
Any business that uses component pricing
On 25 September 2008, the Federal Government introduced into
parliament the Trade Practices Amendment (Clarity in Pricing)
Bill to amend the Trade Practices Act 1974 (Cth). If
passed, the changes will affect all businesses which advertise the
price of their goods or services in component parts.
The bill targets misleading "component pricing"
practices. Component pricing is where goods or services are
advertised in component parts – for example, where a
price is stated as $X (base amount) + $Y (taxes, fees and
The changes are intended to protect consumers from misleading
advertising, and to replace the current obligation of businesses
under the Trade Practices Act to specify the "cash
price". In practice, the amendments may prove controversial
given the increased compliance burden on businesses and the
criminal penalties which may result from a breach of the proposed
The bill will replace section 53C of the Trade Practices Act
with a new section. At the time the GST was introduced, the Federal
Government received legal advice that section 53C would require
consumer advertising to display a single price including GST and
also any other compulsory taxes. However, the courts have since
held that it is not necessary for a single figure price to be
specified. The new section 53C is intended to rectify this
The key features of the proposed changes are:
single price: there is a requirement to
specify the price as a single figure. This must include all amounts
that are quantifiable at the time of advertising. Where the total
amount is not known, the minimum price must be disclosed as a
prominently displayed: the single figure must
be displayed "in a prominent way". Also, the single
figure must be displayed "at least as prominently" as the
most prominent of the other components of the price.
consumers only: the new provisions are
intended to apply to the advertising of consumer goods only. It is
not intended to apply to price representations between businesses
or between businesses and government.
The changes will not prohibit component pricing, provided that
the single price is also displayed.
Delivery or other charges relating to sending the goods from the
supplier to the customer do not need to be included in the single
Also, in relation to certain service contracts with periodic
payments (for example, a mobile phone contract), while there is
still an obligation to prominently display a single figure, the
single figure does not need to be displayed as prominently as the
While the Federal Government has targeted the advertising of
cheap airfares as one example of misleading component pricing, the
changes will apply to all industries.
Two examples are below
Example 1: Motor dealers
For motor dealers, this could be the end for "plus on-road
costs" as the price for vehicles must be advertised as:
"$32,990 plus on-road costs = $34,990 drive away no more to
pay"; " $34,990 drive away no more to pay"; or
"$32,990 plus on-road costs"
Example 2: Retailers
For retailers, you must advertise the price for goods as:
"$5,000 + GST = $5,500" or simply "$5,500
"$5,000 + GST"
We will keep you informed as to the progress of the bill in the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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