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Monday,  April 15, 2024 9:03 AM 

TICO updates fee structure, announces April 1 start date

  • Other
  •   02-01-2024  3:12 pm
  •   Pax Global Media

TICO updates fee structure, announces April 1 start date
Richard Smart, TICO president & CEO. (Supplied)
Pax Global Media

The Travel Industry Council Ontario (TICO), following a review last fall, has announced fee changes that it says aligns with the Auditor General’s recommendations to revise the organization's structure.

According to a news release shared Thursday (Feb. 1), the following fee updates will take effect on April 1, 2024:

Decreased Compensation Fund payments to $0.05/$1,000 from $0.25/$1,000 of Ontario Gross Sales (proposal #1 from consultation)

As a “burden reduction measure,” Compensation Fund assessments will only be due one time per year, payable within 90 days of year-end, TICO says. Mid-year filings will no longer be required.

READ MORE: Ontario Auditor General report “paints a bleak picture” of TICO, says CATO

And secondly, recalibrated fee bands and a new method for calculating renewal fees. 

Ontario Gross Sales (OGS) continues to be the basis for calculating fees, TICO said, posting the following chart to illustrate how it breaks down: 

New Fee Bands (OGS)
New Renewal Fees
Less than $10M
Flat rate of $750
$10M - $50M
$0.29 per $1,000 in OGS
$50M - $100M
$0.27 per $1,000 in OGS
$100M - $250M
$0.25 per $1,000 in OGS
Greater than $250M
$0.23 per $1,000 in OGS
  • New late filing fees (proposal #5 from consultation).
Type
Late Fee
Annual financial filing (due within 90 days of year-end)
$100
Registration renewal (due within 90 days of year-end)
$100
Notice of business change (due within 5 days of change)
$25


When will fees change?

When will TICO fees change? "If your year-end is on or after April 1, 2024," TICO says. 

"You will calculate your renewal fee and Compensation Fund assessment based on the new fee model," the association said, sharing the following guidance:  

  • Compensation Fund assessment - $0.05/$1,000 OGS, calculated using the last 12 months of sales.
  • Renewal fee based on the new fee bands, calculated using OGS reported on your last financial filing.
  • You can estimate your fees using TICO’s fee estimate calculator (please note, renewal fees and Compensation Fund assessments are calculated using sales levels from different years). You will continue to receive an invoice for renewal fees approximately 60 days prior to your payment due date.
  • Payments are due to TICO within 90 days of year-end and must be accompanied with a Form 1 submission.
  • If your year-end is on or before March 31, 2024 – you will calculate your renewal fee and Compensation Fund assessment based on the existing fee model. You will switch to the new fee model for your 2024/2025 renewal cycle.
    • Compensation Fund assessment - $0.25/$1,000 OGS
    • Renewal fee based on existing fee bands
    • Payments are due to TICO within 90 days of year-end and must be accompanied with a Form 1 submission.

Status of other proposals

As part of the consultation process, TICO has made two additional proposals that require government consideration and decision-making. 

From left: Kristina Wilson, TICO stakeholder & relations manager; Sanja Skrbic, TICO chief financial & administrative officer; Richard Smart, TICO president & CEO on Oct. 5, 2023. (Pax Global Media)

One, to remove end-supplier coverage from the Compensation Fund and two, double the maximum per person Compensation Fund limit to $10,000.

"These proposals have been brought forward to government with a request for consideration," TICO said. 

Voluntary consumer pay model

TICO says it "understands" that the travel industry is looking for added flexibility to recover regulatory costs. 

"As part of the consultation, TICO asked registrants if there was an interest in a voluntary consumer pay model, where regulatory fees would be disclosed and passed through to consumers at the point of sale," the association said. 

READ MORE: TICO CEO Richard Smart unpacks proposal for future funding; consumer pay model a no-go

"Overwhelmingly, we heard that registrants were not interested in this option. Registrants expressed concerns that any fees passed to consumers would be a competitive disadvantage, an added burden and potentially cause consumer confusion."

Why is TICO changing its fees?

TICO has not changed its renewal fees since 2011, but since then. the travel industry "has become more complex with the evolution of technology, the post-pandemic environment and the prevalence of fraud," the association said. 

Its says its expenses have grown by an average of approximately three per cent each year. 

READ MORE: Ontario Auditor General notes "significant concerns" in TICO audit; Richard Smart, ACTA respond

"TICO has done its best to keep expenses reasonable while adapting to these new demands. During this time, inflation has accumulated at a rate of approximately 30 per cent (according to the Bank of Canada)," the association said. 

The new funding model represents a 3.4 per cent aggregate increase in total fees paid by registrants, based on sales from 2019/2020, the association said. 

"While some registrants will see fee increases higher than this rate, the new fee bands are more equitable at distributing fees across all registrants. Additionally, there is a minimum cost to regulating a registrant of any size, which the new minimum fee of $750 addresses," TICO said. 

The association said it is open to revisiting the lowest fee band within one, two years of implementation "to better understand the impact on registrants," to consider the transition to an enhanced risk-based model, and the broader recommendations contained in the Auditor General’s report.

The audit 

The update comes after the Office of the Auditor General of Ontario noted "significant concerns" in a 51-page value-for-money audit report filed late last year. 

Among many findings, the report found that TICO’s cost to administer the Compensation Fund “may outweigh the benefits it provides to consumers.”

Over the past ten years, TICO’s registrants booked over $133 billion in travel services for consumers, the audit says.

Meanwhile, TICO’s estimated annual cost to administer the Fund for 2022-23 of $1 million is nearly three times more than the average of $350,000 in compensation paid from the Fund to consumers on average over the last 10 years, the audit notes.

The report also calculated that since 1997, TICO used an estimated $31 million from the Fund to cover its own operating costs.

To read the Auditor General of Ontario's full report, click here. To view the report at a glance, click here.  

Consultation feedback

In October 2023, TICO shared five proposals with industry and conducted a five-week consultation process. 

While registrants’ feedback on the five proposals was "generally positive," TICO said "we did also hear from registrants who had concerns about TICO’s approach." 

"We thoroughly considered all feedback when deciding how to move forward and will continue to use the input we received as we consider any future changes," the association said. 

For a summary of the consultation feedback, please see this recent edition of TICO Talk.


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