Are you part of the growing craze of earning additional income through car sharing platforms such as Car Next Door, Carhood or DriveMyCar Rentals? If so, there are certain financial considerations you need to know, especially in regards to your tax implications, deductions and any GST you intend to charge.
Here are the financial considerations all car share owners need to be aware of:
Your Income Tax Implications
When third-party services entered the Melbourne car share and transportation market, there was much ambiguity about what the tax considerations were. Now that the industry has become more regulated on the back of strong pressure from the Taxi Commission, it’s important that you declare any income you earn from your car share operations. Whether you’ve earned a couple of hundred dollars or a couple of thousand, you must declare it come tax time.
Think you can get away it? The Australian Taxation Office (ATO) now has sophisticated systems and data to help identify where sharing platforms are being used to generate income. Ultimately, if you’re unsure or need professional advice, it’s always best to utilise the services of a tax accountant to ensure everything is above board.
The good news is that individuals who rent their vehicle are entitled to claim some deductions, as long as those expenses are directly related to the renting, hiring or sharing of your car, and you have the relevant receipts as record of your expenses.
Other things you can claim deductions on include membership, availability and cleaning fees, as well the general running expenses of your car. Again, remember that you can only claim for expenses that occur for the purpose of your car share agreement and not for any personal use.
The rate for work-related car expenses has increased for the income year starting 1 July, 2018, which is now 68 cents per kilometre. Using this method is limited to 5,000km per vehicle. This applies if you have chosen to use the cents per kilometre method for calculating work-related car expenses and will remain in place until the Commissioner decides it should be varied.
One thing to note is that you cannot claim for any expenses that relate to a car you have salary sacrificed with your employer.
Your GST Obligations
When operating a car sharing business you are to be registered for GST no matter your turnover. When you report GST, you are also able to claim credits on the GST included in the price for costs incurred in earning the revenue including GST on renting/hiring your car.
Need more advice about what your taxation and financial implications are for car sharing? Get in touch with us today so we can help you declare and claim the right amounts.