Diners face GST on tips after August 1

Scott Bolles
Prompt idea: Chef Chui Lee Luk has come up with a solution.
Prompt idea: Chef Chui Lee Luk has come up with a solution. Photo: James Brickwood

Diners could be hit with a GST on tips if restaurateurs introduce set service charges to curb an expected downturn in tips.

The August 1 scrapping of signatures for credit cards has waiters concerned about their back pocket.

"It's not illegal for restaurants to do it [impose a service charge] but they'd need to declare it [on the menu], and because it would be levied it'd be subject to GST," says John Hart, head of Restaurant and Catering Australia.

The vast majority of restaurants are expected to try their luck at the terminal, where they believe customers will be less likely to add a tip when inputting their PIN.

Hart says many banks have done little to add functions for easily adding tips.

Restaurateurs are exploring new ways for customers to pay. Chow Bar & Eating House owner Chui Lee Luk has introduced Paypal.

"Paypal has created a prompt to leave a gratuity before final payment," she says.

"It is about giving people different ways to pay. In Malaysia, my father was once given a live goat as payment for accountancy services," she quips.