Following last year's overhaul of NSW's compulsory third-party car insurance scheme, which has slashed up to $172 a year off CTP premiums, most motorists are now eligible for a partial refund on their green slips – but it comes with a price.

Under the reform, NSW motorists can get up to $125 refund, but not before they pay what has been criticised as a “secret tax” to have their claims processed.

The Service NSW website said “there is a minimum refund amount of $10 and each refund is subject to an administration fee," and claims less than $10 "before or after the administration fee has been applied," are not eligible for a refund, The Sydney Morning Herald reported.

Yasmin Catley, opposition spokesperson for innovation and better regulation, said the “secret tax” is a slap in the face to NSW motorists who already pay the highest green slip prices, and “will bring in more than $40m for the Berejkilian government – enough to run a medium-sized government agency.''

"The government is offering a second-rate insurance scheme that will leave many innocent victims of motor vehicle accidents at the mercy of insurance companies," Catley told the publication.

Victor Dominello, minister for finance, services, and property, confirmed that the $7.87 charge will be applied to each CTP refund claim, and defended the fee saying it is in line with other Service NSW charges.

"A minimum threshold of $10 has also been applied,” Dominello told Fairfax Media. “The application of this threshold will leave a surplus of approximately $2.5m which the government will return to motorists by reducing next year's medical services levy."

Within the first two days of the new online reimbursement scheme, more than 200,000 refunds were claimed, SMH said.