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  • Peer-to-peer car sharing deductions

    When you share (rent or hire out) your car through a peer-to-peer car sharing platform, such as Car Next Door, Carhood or DriveMyCar Rentals, there are certain things you need to be aware of. You need to:

    • declare all your income in your tax return
    • only claim the expenses you are entitled to claim as income tax deductions
    • keep records of your income and the expenses you can claim as deductions.

    See also:

    Claiming expenses

    You can claim expenses for income tax purposes as long as:

    • they are directly related to the sharing of your car
    • you keep records such as receipts to back up your claims.

    As car sharing membership agreements may vary between platforms, the expenses you may incur can also vary. Your main expenses may include:

    Membership fees

    Some car sharing membership agreements charge owners a membership fee for accessing their services and online platform. Generally, you may claim the full amount of the membership fees that your car sharing platform charges you.

    Availability fees

    Some car sharing membership agreements contain an availability requirement for sharing your car. There may be a requirement for your car to be available for a certain number of months each year or for a particular number of weekends each month. If you fail to meet the availability requirement, you may be charged a fee that you will be able to claim as a deduction.

    Car expenses

    You can deduct car expenses that directly relate to the sharing of your car. These rules do not apply to other vehicles such as trucks, motorbikes, bicycles or self-driving recreational vehicles.

    You can only claim a deduction for a car that you own or lease. For example, you cannot claim car expenses for an employee vehicle under a salary-sacrificed novated lease. However, you still need to declare the income you have received and may also claim non-car expenses such as membership fees.

    Car expenses include depreciation, interest, leasing payments, insurance and registration. They can also include service, repair, cleaning and fuel expenses if you incur those expenses under your car sharing agreement. For example, different agreements require either the car borrower or the car owner to pay the costs of refuelling the car. You are only entitled to claim expenses where you have spent the money yourself and weren't reimbursed.

    In most cases, you will also use your car for personal use. This means you need to apportion any car expenses between personal and income-producing use.

    If you own the car as an individual (or as a partner in a partnership where at least one partner is an individual), there are two methods of claiming car expenses:

    • cents per kilometres travelled
    • keeping a logbook to calculate a proportion of car expenses claimed.

    See also:

    The cents per kilometre method

    Under the cents per kilometre method, you can claim a maximum of 5,000 income-producing kilometres per car.

    You can count all of the kilometres used during car sharing as income-producing travel. If you also use the car for other income-producing purposes, such as ride-sourcing, then you count this as part of your yearly income-producing travel kilometres as well.

    This means that if you drive the car for other income-producing purposes, you will need to add that travel to the car sharing travel in order to work out your total income-producing kilometres travelled. This will be subject to the 5,000 kilometre limit for that car.

    You don't need written evidence to show how many kilometres you have travelled, but we may ask you to show how you worked out your income-producing kilometres. When using the cents per kilometre method, your claim is based on a set rate for each income-producing kilometre travelled.

    The cents per kilometre method takes all your vehicle running expenses into account. This means that you cannot claim any specific car-related expenses such as depreciation or interest or lease payments in respect of using your car to earn income from car sharing.

    See also:

    The logbook method

    Under the logbook method, you can claim the income-producing use percentage of car expenses based on the logbook records of your car’s usage.

    You do this by:

    • dividing the distance travelled for income-producing use by the total distance, and then multiplying this number by 100 to get the percentage
    • determining your total expenses, including depreciation, for the income year
    • multiplying your total expenses by your percentage to find the total amount you can claim.

    We will accept the information provided by your platform provider as evidence of the income-producing kilometres your car has travelled. You also need to keep your yearly opening and closing odometer readings for the logbook period, which is a minimum continuous period of 12 weeks.

    Each logbook you keep is valid for five years, but you may start a new logbook at any time. If you establish your income-producing-use percentage using a logbook from an earlier year, you must keep that logbook and maintain odometer readings in the following years.

    If you drive the car for other income-producing purposes, you will also need to add that travel to the car sharing travel in order to work out your total income-producing kilometres.

    See also:

    Example: How to work out expenses for car sharing

    Ethan owns a car registered in his name and rents it out most weekdays through a peer-to-peer car sharing platform. Ethan is not registered or required to be registered for GST. He pays a monthly membership fee of $60 to cover use of this digital platform.

    Ethan works in the city and has the car mostly available for sharing during the week. Ethan tends to use the car privately on one day in the weekend and for two nights during the week. Ethan is required to refuel the car under his car sharing agreement.

    Ethan earnt $6,000 for the year renting his car out during the year.

    Ethan's car sharing expenses for the year include:

    • depreciation = $2,400
    • interest on loan = $775
    • registration and insurance = $600
    • car service, cleaning and repairs = $1,250
    • platform provider membership fees = $720 ($60 per month)
    • fuel = $2000

    Ethan is able to keep track of car travel through the information given to him by the platform. He also records yearly opening and closing odometer readings of his car.

    Ethan uses the information to calculate his assessable income and the deductions he can claim. He can calculate his claim for expenses related to car sharing by choosing one of two methods.

    Cents per kilometre method

    Ethan reviews his records and information provided by the platform, and calculates his car has travelled 6,600 kilometres as part of car sharing. Ethan calculates his car expense deductions under the cents per kilometre method as being $3,300, which is 5,000 kilometres multiplied by 66 cents per kilometre.

    Log book method

    At the end of the income year, Ethan works out his income-producing kilometres by determining car sharing kilometres from information provided by the car sharing platform.

    Ethan records the car sharing trips using a logbook. At the end of the income year, the logbook shows his car travelled a total of 11,000 kilometres – with 6,600 kilometres for car sharing purposes.

    Ethan then makes the following calculation to determine his income-producing use percentage: 6,600 ÷ 11,000 × 100 = 60%. 60% of travel was for income-producing purposes, so Ethan can claim 60% of his car expenses.

    Car expenses:

    • depreciation – $2,400 × 60% = $1,440
    • interest on loan – $775 × 60% = $465
    • registration and insurance – $900 × 60% = $540
    • car service, cleaning and repairs – $1,250 × 60% = $750
    • fuel – $2000 × 60% = $1200

    Total car expenses deductible under the log book method = $4,395

    Ethan chooses the log book method for his car expenses as it provides the larger car expense deduction available to him.

    The platform membership fee of $720 for the year ($60 per month) is 100% deductible, along with any availability fees Ethan is charged.

    Ethan's total expenses are $5,115 (total car expenses of $4,395 plus $720).

    Ethan reports his income and deductions for the year as follows:

    • 'other income' label = $6,000
    • 'other deductions' label = $5,115

    It's important that Ethan keeps records of his income and expenses, such as statements from the digital platform, bank account and other invoices.

    End of example
    Last modified: 12 Jun 2019QC 56537