Some people don’t use their car every day of the week, so on the days it’s not sitting in the car park at work, it’s off earning a few extra bucks. There are many third party services popping up that make it possible for your car to earn some income while you are not using it, such as Car Next Door, Carhood or DriveMyCar Rentals.
But, the ATO are now examining these arrangements to ensure everyone is paying their fair share of tax. The ATO has flagged these car sharing service platforms and believes that, by using their sophisticated data matching systems, they can identify where sharing platforms are being used to generate income.
If you are generating income by renting out or sharing your car, you should be aware that you can also claim relevant expenses that you have paid.
The expenses you can claim include:
- platform membership fees
- availability fees
- cleaning fees
- car running expenses
There are a couple of ways to determine the expenses claimable – you could simply use the cents per kilometre method, or you can keep a logbook and any private travel will need to be determined in these calculations.
The most important thing that you must do is keep accurate records of the activity, income and costs. The sharing platform will be able to provide detailed records of the income and the kilometres travelled for sharing purposes, which can be used as a good start on calculation for tax. However, a detailed record of expenses must also be kept. Even though this will be the most time consuming aspect to the arrangement, it is critical to ensure you are not left paying way too much tax.
Also, depending on the circumstances, you may also be required to be registered for GST or it may be beneficial to register for GST.
If you have any queries on the sharing economy and the details mentioned above, please give us a call on 8393 1000 to discuss.