Any information stated by Car Next Door is general advice and does not take your individual circumstances into account. You will need to fully consider your individual situation and if necessary seek professional advice.
Do I need to declare income from renting out my car?
The ATO has also prepared some general advice for people who earn money by providing goods or services in the sharing economy. You should also speak with your accountant to get advice relevant to your situation.
You may need to declare your earnings from renting out your car, even if your income is less than your expenses.
If it sounds like we are being vague, it’s just because the tax laws aren’t black and white on whether something is assessable income or not, and that’s where getting professional advice is important.
What expenses may be deductible?
If you determine that your income from Car Next Door is assessable, you would declare the gross earnings, but against that you may be able to claim all or a portion of the costs that you have incurred in making your car available for rent, such as:
- the cost of the vehicle, stamp duty, and finance costs;
- the Car Next Door monthly membership fee;
- fuel costs;
- maintenance, servicing and repair costs;
- cleaning costs;
- advertising; and
- depreciation (if your car is reasonably new, this is likely to be significant).
The portion of costs that are tax deductible is likely to depend on how much the car is rented out and how much it is used privately. You should speak to your accountant about how to determine this. One method is to look at the kilometres the car travels with borrowers versus the kilometres you drive your car.
The borrowers' kilometres are shown on your monthly invoice, but you will need to record your own kilometres - e.g. by keeping a log, or by recording your car's odometer at the start of the financial year and deducting the borrowers’ kilometres from the total on the odometer at the end of the financial year.
Should I register for GST?
We recommend you speak to your accountant about registering for GST. As with income tax, there's no one-size-fits-all solution. Your accountant will be able to provide you with professional advice for your individual situation.
What should I do?
- Keep and file receipts and records of any expenses related to your car, including receipts for fuel, servicing, tyres and cleaning.
- If you're not sure about your tax obligations, speak to your accountant. If your accountant is unfamiliar with the sharing economy, our accountant Harry Edwards (who has a detailed understanding of how Car Next Door works) may be able to help - contact him on email@example.com or 02 8292 9700 for specific advice. The ATO is coming to grips with the fast-moving sharing economy and updating its position on it over time, so it's a good idea to get personalised advice.
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