Introduction
This Schedule sets out an example of typical overhead costs for an owner driver1 supplying a Tandem GVM 22.5 tonnes2.
The example is based on certain assumptions about the business, for example, that the vehicle is 5 years old, is in operation for 7.6 hours a day, and uses a certain number of tyres, and operates within the excavation sector of the building and construction industry.
This Schedule aims to help owners to:
- better understand how increases and decreases in different cost items affect overall profitability
- calculate their own unique cost model.
The Schedule aims to help both owner drivers and their hirers to better understand the typical operating costs of an owner driver business and to inform their negotiations.
The schedule does not set minimum rates that must be paid.
This Schedule is based on the Transport Industry Council’s evaluation of the costs that an owner driver is recommended to consider in order to operate their business sustainably.
This Schedule is only a general guide. Owner drivers are strongly advised to seek independent professional accounting advice for their own situation. They should discuss all issues with their hirer or potential hirer to ensure that there is no misunderstanding concerning payment structures.
This Schedule is published under section 14 of the Owner Drivers and Forestry Contractors Act 2005 (Vic) (the Act). Under the Act, hirers and freight brokers must provide this Schedule to an owner driver:
- at least 3 business days before the owner driver is engaged, if the owner driver will be engaged for a period of at least 30 days
- or on the 30th day, if the owner driver is engaged for a total period of at least 30 days in any 3- month period.
These requirements also apply to tender situations.
This Schedule will be revised at least annually. Under section 18 of the Act, hirers and freight brokers are required to give owner drivers a copy of any such revised Schedule as soon as possible after it is published.
This Schedule is structured as follows:
Part 1: Fixed costs
This part describes typical fixed (or annual) business costs. These are the costs that the business must pay each year regardless of how many kilometres the vehicle travels.
Part 2: Variable costs
This part describes typical variable business costs. These are the costs (such as fuel and tyres) that vary with how many kilometres are travelled.
Part 3: Payment for labour
This part describes the range of rates that are typically paid to drivers for performing similar kinds of work as a casual employee rather than as a contractor. This information is given to help the owner driver to determine what may be a reasonable payment for their own labour.
Part 4: Totals
This part allows the owner driver to prepare total hourly rates for ordinary hours (up to 1,672 a year) and excess hours.
Return on investment needs to be factored in where appropriate. As a guide, the schedule provides for a 5 per cent return on investment.
Note that this is not a prescribed or recommended rate. Owner drivers are strongly recommended to consider their own circumstances and obtain advice.
The issue of return on investment is dealt with in section 11 of the Owner Drivers and Forestry Contractors Code of Practice.
Key assumptions
The example set out in this Schedule is based on certain assumptions about the vehicle used, hours of work and the type of business. The assumptions used that have the greatest impact on the figures given are:
| Subject | Costing assumptions |
|---|---|
| Vehicle and finance | The fixed costs are based on:
Note that if the business owns the vehicle outright, or has a loan, the cost structure will be different with depreciation as the relevant cost rather than lease payments. All costs exclude GST. |
| Driving hours per year (kilometres travelled) | The calculation of the fixed costs assumes the vehicle is in operation for 7.6 driving hours per day for 220 working days a year. This equals 1,672 hours of operation a year. The example spreads fixed operating costs over those 1,672 hours. In Part 4, a separate hourly rate for hours over and above the base hours of 1,672 a year is provided. To avoid double counting of fixed costs, this rate only includes variable costs and a return for labour, based on an overtime labour rate. |
The cost structure of an individual business will be different if, for example:
- the age or current capital value (or both) of the vehicle differs from the above figures
- other finance arrangements apply, for example, if the vehicle is fully owned or is subject to a loan
- more or fewer hours are worked each year
- the vehicle is fitted with additional features
Because of these potential variations, great care should be taken in using the indicative figures set out in this schedule, as the costs of the individual business may vary significantly.
To help owner drivers to calculate their own unique cost model, a blank column is included in the tables of this Schedule to calculate the business’s own unique costs.
Rate structures
This example calculates the cost of running a typical owner driver business, described as an hourly rate, made up of fixed and variable costs, and a payment for the owner driver’s labour. The Schedule does not calculate or suggest any particular rate calculation or payment method.
Arrangements for payment of owner drivers in the transport industry vary enormously. They can be paid an hourly rate, a load rate or even kilometres travelled. If an owner driver is paid on such an arrangement, the Schedule set out below can be used as a base to calculate the cost to the business of travelling per kilometre. Unions, industry associations, or accountants and other professional advisers can assist in this task.
Part 1 - Fixed annual costs per year and per hour
Note: All costs exclude GST
| Cost items assumptions used in the example | Example: Typical cost per year | Your costs | Variations in this cost item |
|---|---|---|---|
Vehicle lease costs This example is based on:
| $34,373 | Finance arrangements will vary widely depending on:
Based on a vehicle with standard features. Additional features will incur additional costs. | |
Registration, permits and TAC fees Based on vehicle registration fee of $1,248 and TAC charge of $2,237 which is net of GST. Assumes payment is made on an annual basis. TAC charge assumes vehicle is garaged in a high-risk area (e.g. metropolitan Melbourne). | $3,378 | These fees are current as at 1 July 2023 but may change. Additional licences may be payable for certain types of operations (e.g. interstate registration). Additional administration charges may apply to registration fees if they are paid in instalments. TAC charges may be lower if the vehicle is garaged in a medium or low risk area. | |
Superannuation Self-funded, based on 11% of own labour assumed at $64,656. | $7,112 | ||
Insurance comprehensive vehicle Based on rate of 3.15% per annum. Based on operator who is over the age of 25, has at least 5 years’ experience and no claims history. Assumes vehicle is not carrying dangerous goods. Assumes vehicle is travelling intrastate only. | $6,400 | Rates may be higher for interstate trucks. Comprehensive vehicle insurance costs may vary depending upon the age and value of the equipment insured, the insurance provider, the amount of any excess payable, the individual’s claims history, the age and experience level of the driver. | |
Insurance personal sickness and accident/income Basic policy, based on 80% of income for 52 weeks, 30-day waiting period. Assumes driver is travelling intrastate only. Assumes driver has no pre-existing conditions. Maximum age limit of 60 years. These fixed costs have been calculated at 100%. | $1,860 | The cost of personal income and accident insurance (also called income protection insurance) will vary depending on the individual’s health history, the amount of income insured, the period of time after an accident before benefits are payable and the maximum period over which benefits are paid. | |
Insurance public liability Assumes policy for public liability claims up to $10 million. These fixed costs have been calculated at 100%. | $600 | ||
Insurance workers’ compensation Assumed at the rate of 6.29% for the assumed labour rate of the business owner of $64,656. Assumes vehicle is primarily travelling intrastate. | $4,066 | The rate is current as at 2023-2024 and is subject to change. The rate charged for workers’ compensation insurance may vary depending on whether the vehicle is travelling short or long distances and whether the vehicle is travelling interstate. The rate may also vary depending on the driver’s claims history. | |
| Yard and parking | $2,815 | The rate is based on $235 per month for a truck and no trailer. | |
Business administration costs Includes maintenance of records, preparation of tax returns, mobile phone charges, consumer price index and sundry business expenses. These fixed costs have been calculated at 100% | $3,329 | Accounting/bookkeeping fees may be lower if the business prepares its own Business Activity Statement (BAS) and accounts. Mobile phone charges will vary significantly depending on level of use. Other costs: Professional association fees, accommodation costs, parking fees, bank charges, and other costs should be allowed for where relevant. This example is based on a business that is already up and running, and does not take into account the costs of starting a business (e.g. registering a company). This figure may also vary depending on contractual conditions. | |
| Total annual fixed costs | $64,041 | ||
Total hourly fixed costs Assuming 1,672 vehicle operation hours. | $38.30 | Assumes that the annual fixed costs of the business are spread over 1,672 vehicle operation hours per year. |
Part 2 - Variable costs per kilometre and per hour
Note: All costs exclude GST (unless otherwise specified)
| Cost items assumptions assumes 44,000 km travelled per year | Typical variable cost per km | Your variable costs per km | Variations in this cost item |
|---|---|---|---|
Fuel Based on a fuel price of 194.2 cents per litre being the national average retail diesel pump price for the 12 weeks to 3 September 2023.
Assuming 30.80 litres consumed per 100 km. | 60 cents | Fuel is the single biggest variable cost and will significantly affect your business. Fuel costs will also vary depending on the age, features and condition of the vehicle. The price of fuel at the time of negotiating with the hirer should be used to assess the base rate fuel cost to be applied. In addition to the base rate, a fuel surcharge can be applied to account for weekly, fortnightly or monthly fluctuation in fuel costs over the term of the contract. | |
Tyres Assumes cost of $752 per tyre (10 tyres) based on vehicle specific average performance and replaced annually or after 44,000km. | 12 cents | Consumption of tyres will vary with the age of vehicle, off-road use, geographic and road conditions, braking frequency and driving techniques and the quality of the tyres used. Cost of tyres will also vary depending on the manufacturer, type of tyres and any discount arrangements. | |
Servicing, repairs and maintenance This cost is based on annual servicing costs of $9873 (one major service and three minor services) and 44,007km travelled per year.
| 22 cents | Repair and maintenance costs will vary significantly with the age and condition of the vehicle. Major repairs may also be required and will be an additional cost in any given year. | |
| Total variable costs per km | 94 cents |
Citylink and Eastlink Tolls
Your hirer is responsible for reimbursing you for toll costs incurred if they direct you to take a toll road, or if you need to take a toll road to complete your trip.
If the hirer does not reimburse the toll costs you will need to include these costs as part of your cost calculation. The price of your trip will depend on the following factors: how far you travel, the type of vehicle you use, whether you travel in peak or off-peak times and the account or pass you choose.
There are trip toll caps on both Citylink and Eastlink for heavy commercial vehicles. To check the current costs, use the following toll calculators:
Part 3 - Payment for the owner driver’s own labour
The next factor to include in a business cost model is an amount for the business owner’s own work (labour) in driving the vehicle and in work such as loading and unloading and tasks necessary in running the business. This Part will provide information to help owner drivers to determine the amount they can aim to receive as a payment for that labour.
Because an owner driver is a small business (not an employee) the hirer is not legally obliged to pay a minimum wage or rate of pay. However, the wages that are paid to casual employee drivers are a useful guide to the market for the labour services of driving a vehicle.
Set out below are rates that would typically be paid for driving a vehicle if this work was performed by a casual employee rather than an owner driver.
These rates will vary over time and should be used as a general guide only. Unions, industry associations, job advertisements and other drivers are sources of advice about the going rates in your industry sector.
| Casual base hourly rate1 | Casual overtime rate 150%2 For the first two hours, over 7.6 per day or 38 per week | Casual overtime rate 200%2 For work extending beyond the first two hours of overtime and until the completion of work |
|---|---|---|
| $32.23 | $39.29 | $52.38 |
| Range of rates typically paid in Victoria3 | ||
| $32.23 to $38.68 | $39.29 to $47.15 | $52.38 to $62.86 |
Notes:
- Casual base hourly rate: The base rate is calculated on the Road Transport and Distribution Award 20204 (the Award) for a casual employee driver of a Tandem – GVM 22.5 and assumes 38 ordinary hours of work completed in five shifts of 7.6 hours between 5.30am and 6.30pm, Monday through Friday. The base hourly rate for casual employees includes an additional 25% loading. This is compensation for not receiving the paid annual leave, personal/carer’s leave and public holidays that ongoing employees receive.
- Casual overtime rate: Casual employee drivers in Victoria receive payment at the rate of time and a half for the first two hours of overtime and double time thereafter for work continuing after an employee’s ordinary hours of work. For each hour of overtime worked a casual must also be paid 10% of 1/38th of the minimum wage specified in the Award for their classification.
- The range of rates in Victoria: This part of the table sets out a range of rates typically paid in Victoria to employee drivers in the transport industry. A range is supplied because the rate paid will vary depending on whether a company is party to an enterprise agreement, the particular industry sector, the skill and efficiency of the particular driver and market factors such as whether there is a shortage of drivers in the area. The top rate in each range is calculated by adding 20% to the bottom rate.
The Award also provides for the following payments, which may need to be factored into your cost calculation, where they apply:
- Shift Allowances: Shift allowances will apply for casual employee drivers at the rate of 117.5% for a shift where ordinary hours of work are completed after 6.30pm but before 12.30am (afternoon shift) and at the rate of 130% where ordinary hours of work are completed after 12.30am but before 8.30am (night shift).
- Work on a Saturday: For all ordinary hours worked on a Saturday a casual employee driver would receive payment at the rate of 150% for hours worked. Work undertaken on a Saturday as Overtime would receive payment at the rate of 150% for the first two hours and 200% for all hours after that.
- Work on a Sunday: For all ordinary hours and overtime hours worked on a Sunday a casual employee driver would receive payment at the rate of 200% for hours worked.
Part 4 - Hourly totals
Hourly total for hours up to 7.6 hours a day, 1,672 hours a year.5
| Total per hour driving costs | Typical costs | Your figures | Notes |
|---|---|---|---|
| Fixed costs | $38.36 | Assuming fixed costs spread over 1,672 hours. | |
| Variable costs | $24.75 | Assuming 26.31 km travelled per hour. | |
| Labour | $38.67 | This example is based on a casual labour rate of $38.67 per hour. See discussion on rates for labour in Part 3. | |
| Return on investment | $5.09 | This example is based on a five per cent return on investment. Owner drivers are strongly recommended to consider their own circumstances and obtain advice. | |
Total per hour (up to 1,672 hours) | $106.81 | Note that this is not a prescribed or recommended rate. Owner drivers are strongly recommended to consider their own circumstances and obtain advice. |
This example assumes that the owner driver will recover fixed annual costs over 1,672 driving hours a year. Many owner drivers work longer than these hours, either extra days each week or longer hours each day.
The table below calculates an hourly rate for those extra hours, using variable and labour costs only, and using overtime rates of pay.
Total per hour - for hours in excess of 7.6 hours per day / 1,672 hours a year6
| Totals per driving hour | Typical costs | Your figures | Notes |
|---|---|---|---|
| Variable costs | $24.75 | Assuming 26.32 km travelled per hour. | |
Labour (overtime rates) | $47.15 - $62.86 | This worked example is based on overtime penalty labour rates of between 150% and 200% See discussion on rates for labour in Part 3. | |
Total per hour (up to 1,672 hours) | $71.90 - $87.61 | Note that this is not a prescribed or recommended rate. Owner drivers are strongly recommended to consider their own circumstances and obtain advice. |
In addition to the figures above, owner drivers should, where relevant, include any amount that they seek as a return on their capital investment. This issue is dealt with in section 11 of the Owner Drivers and Forestry Contractors Code of Practice, available from wageinspectorate.vic.gov.au/odfc.
Note that this is not a prescribed or recommended rate. It is strongly recommended that owner drivers obtain advice on their own individual circumstances and discuss all issues with their hirer or potential hirer to ensure that there is no misunderstanding concerning payment structures.
Download a copy of this schedule
[1] Owner Driver is defined in the Owner Drivers and Forestry Contractors Act 2005. The definition is also affected by the Owner Drivers and Forestry Contractors Regulations 2017 made under the Act.
[2] Rates and Costs Schedules have been published for 1 tonne Van Courier Messenger, 1 tonne GVM – General Freight, 4.5 tonne GVM, 8 tonne GVM, 12 tonne GVM (2-axle), Prime Mover (Bogie Drive), Semi-Trailer (Bogie Drive, 6-axle), Truck and Quad Axle Dog Trailer – GCM up to 50 tonnes and Truck and Tri-axle Super Dog Trailer GCM up to 42.5 tonnes. Hirers are required to provide owner drivers with the Schedule that most closely relates to the owner driver’s vehicle.
[3] Cost based on the average price of a 2018 manufactured three-axle Japanese vehicle of $203,182. This price is based on a vehicle with standard features, additional features will incur additional cost.
[4] The Award rate is accurate as at 1 July 2023, bit is varied from time to time by the Fair Work Commission. You can find information about the most recently published minimum employee rates by visiting www.fwc.gov.au or contacting your association or union.
[5] Assumes 38 ordinary hours of work completed in five shifts of 7.6 hours between 5.30am and 6.30pm, Monday through Friday.
[6] Assumes overtime completed by employee working 38 ordinary hours of work between 5.30am and 6.30pm, Monday through Friday.
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