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  • Peer to peer car sharing

    Renting, hiring or sharing your car with others

    When you rent, hire or share your car through a peer to peer car sharing platform, such as Car Next Door, Carhood or DriveMyCar Rentals, you:

    • need to declare all your income in your tax return
    • are entitled to claim certain expenses as income tax deductions
    • may need to pay goods and services tax (GST) on amounts you earn and claim GST credits for expenses
    • need to keep records of the income received and of the expenses you can claim as deductions and GST credits.

    See also:

    Income received

    If you rent, hire or share a car that you own or lease, the payments you receive are assessable income and must be included in your tax return. The amounts received are assessable income even if you are not carrying on a business of letting cars on lease or hire.

    If you own a car jointly, then you declare income and claim expenses in proportion to your share of ownership.

    When you must pay GST

    If you are registered, or required to be registered for GST, and have an enterprise of renting, hiring or sharing your car, you will be liable to pay GST on payments you receive.

    This will be the case if:

    • you are already registered for GST for another enterprise and also carry on an enterprise of renting, hiring or sharing your car
    • you don’t have an Australian Business Number (ABN) or are not registered for GST and your GST turnover from all of your enterprises (including renting, hiring or sharing your car) together is, or is expected to be, $75,000 or more per year.

    In the second instance you will need to get an ABN and register for GST.

    When registered, you will be able to claim GST credits for any GST included in the price you pay for expenses that you incur in carrying on your enterprise of renting, hiring or sharing your car. You will need to hold a valid tax invoice to claim GST credits for expenses over $82.50.

    If you claim GST credits for purchasing a car, the maximum GST credits are limited to one-eleventh of the car limit if the price of the car exceeds that limit.

    If expenses also relate to your personal use of your car, you will need to apportion, as personal use cannot be claimed. You can use the cents per kilometre or log book method (discussed below) to determine the extent of private use.

    See also:

    Claiming expenses for income tax

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

    • they are related to the renting, hiring or sharing of your car
    • you only claim the part of the expense that directly relates to the renting, hiring or sharing
    • you keep records, such as receipts, to back up your claims.

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

    • membership fees
    • availability fees
    • car expenses.

    Membership fees

    Some car sharing membership agreements charge owners a membership fee for accessing their services and online platform. Generally, you can 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 the hire of your car. There may be a requirement for your car to be available for hire 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 which you will be able to claim as a deduction.

    Car expenses

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

    '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 bear the costs of refuelling the car. You are only entitled to claim expenses to the extent that you have incurred them.

    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.

    See also:

    If you own the car as an individual (or as partner in a partnership that has an individual partner), there are two methods of claiming car expenses:

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

    The easiest way to track your car expenses is by using the ATO app's myDeductions tool.

    See also:

    • myDeductions – How to add a vehicle and manage car trips

    The cents per kilometre method

    Under the cents per kilometre method:

    • you can claim a maximum of 5,000 business kilometres per vehicle
    • 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 business kilometres
    • the rate that you can claim is based on a set cost per kilometre and covers claims for all general running costs of your car
    • you cannot make a separate claim for depreciation of the car’s value.

    When using the cents per kilometre method, your claim is based on a set rate for each business kilometre travelled. This rate is set at 66 cents per kilometre for the 2016–17 year and the 2017–18 year. The rates are reviewed each year.

    To work out how much you can claim, multiply the total business kilometres you travelled by the number of cents per kilometre.

    This figure takes into account all your vehicle running expenses. 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. You can count all of the kilometres used by car share driving of your car via the sharing platform as ''business travel'. If you also use the car for other income earning purposes, such as ride sourcing, then you count this as part of your yearly business travel kilometres also.

    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 business kilometres travelled that will be subject to the 5000 kilometre limit for that car.

    The logbook method

    When using the logbook method you can claim the business-use percentage of car expenses based on the logbook records of your car’s usage.

    You do this by:

    • dividing the distance travelled for business by the total distance. Multiply by 100 to provide the percentage
    • determine your total expenses, including depreciation, for the income year
    • multiply 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 business kilometres your car has travelled. Yearly opening and closing odometer readings also need to be kept. 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 business kilometres.

    You can create a logbook and record work-related car trips using the myDeductions tool in the ATO app. If you use and record your trips using myDeductions you don't need to keep paper records as well.

    See also:

    Example: working out income tax deductions for renting out a personal car

    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.

    The platform provider has a website that Ethan uses to manage his car sharing as a car owner participant. 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'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 his participation with the platform provider. He also records yearly opening and closing odometer readings of his car.

    Ethan uses the information to calculate his assessable income and 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 records and platform provided information and calculates that 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 business kilometres by determining car sharing kilometres from information provided by the car sharing platform.

    Ethan records the car sharing trips using the myDeductions tool in the ATO app. At the end of the income year, the myDeductions tool shows his car travelled a total of 11,000 kilometres and 6,600 kilometres were for car sharing purposes.

    Ethan then makes the following calculation to determine his business-use percentage: 6,600 ÷ 11,000 × 100 = 60% of travel was for business purposes. 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 provider membership fee of $720 for year ($60 per month) is 100% deductible, along with any availability fees Ethan is charged.

    End of example
    Last modified: 16 Aug 2018QC 56537