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The ATO has issued another warning in its series of crackdowns on niche areas within the tax landscape of Australia, this time to car sharing services such as CarNextDoor and DriveMyCar.
While the implications around car and travel-related expenses are fairly well known by taxpayers and business owners, the ATO has concerns with those participating in the sharing economy.
Startups like CarNextDoor and DriveMyCar allow people to rent out their personal vehicles to others while they aren’t using them. The services have become popular recently as a way for people to earn a bit of cash on the side. However, it’s this cash the ATO is keeping an eye on. Much like Uber, this is income that needs to be declared as income in your tax returns.
When it comes to what can and can’t be claimed, it becomes more complex. For those renting out their cars through these sorts of services, the ATO has said that any expenses claimed “must relate directly to the renting, hiring or sharing of your car”, and all receipts and records should be kept.
These can be costs like platform memberships and fees, or general car running expenses, but only if those running expenses are your responsibility under the car sharing agreement, rather than the renters.
Also, cars designed to carry a load of less than one tonne can use the cents-per-kilometre or logbook method to calculate fuel expenses, but if a motorbike or vehicle designed to carry more than one tonne is rented, the cents-per-kilometre method cannot be used.
Vehicles owners who also use their car for private travel will need to separate those expenses from their other costs.