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 my income from renting out my car?
Whether or not you should declare the income you earn from renting out your car really does depend on whether you would be considered to be doing it as an occasional pastime or a hobby, or is it more business-like with a bit more regularity and structure.
If you had a car on the platform regularly, and were earning regular income each month, it may cross over to being income that you should declare. This is the case even if your income is less than your expenses.
If it sounds like we are being vague, we’re not wanting to be - it’s just that 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. There are a few factors that mean it doesn’t lend itself to a one-size-fits-all blanket piece of advice.
What expenses may be deductible?
In the instance where you have determined that your income from Car Next Door is assessable, you would declare the gross earnings, but against that you can claim all or a portion of the costs that you have incurred in making your car available for rent, such as:
- the Car Next Door monthly membership fee;
- fuel costs;
- maintenance costs;
- cleaning costs; and
- depreciation (if your car is reasonably new, this is likely to be significant).
The portion of costs that are tax deductible depends on how available the car is for rent versus when you have it for private use. The easiest way to determine this is to look at the kilometres the car travels with borrowers (which we’ll provide you on your invoices) versus the kilometres you drive your car (which you will need to record - e.g. by keeping a log or deducting the borrowers’ kilometres from the total on the odometer at the end of the year).
The ATO has also prepared some general advice for people who earn money by providing goods or services in the the sharing economy.
What should I do?
- Keep and file 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 firstname.lastname@example.org 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.