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; and
- need to keep records of the income received and of the expenses you can claim as deductions and GST credits.
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.
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; and
- 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 to determine the extent of private use.