Australian Tax Office puts car sharing operators on notice

Are you declaring your expenses correctly? If not, the Tax Office has its sights set on you.

The growing popularity of car-sharing apps like Car Next Door and Carhood has piqued the interest of the Australian Tax Office (ATO), which is calling on owners to learn the tax implications of the services.

According to the ATO, renting your car through ‘sharing economy’ apps makes you eligible for certain deductions, but not everything can be claimed.

“Car sharers can legitimately claim deductions for expenses like platform membership fees, availability fees, cleaning fees and car running expenses,” said assistant commissioner, Kath Anderson.

“However, a deduction can only be claimed for cleaning and running expenses if you are responsible for them under your car sharing agreement.”

Anderson suggested people who use their cars as a private vehicle and loan it out on the side could be double dipping on expense claims, which could put them in the ATO’s sights.

“If you use your car for your own private travel, you will need to exclude all the related costs. And you cannot claim for expenses related to a car that you salary sacrificed,” Anderson explained.

“Claims for private use amount to asking the rest of us to pay for your private petrol or car wash, and I’m pretty sure most Australians would say that’s not ok.” she said, implying some operators are taking more than their fair share.

The best way to avoid falling foul of the taxman? According to the ATO, it’s all about knowing your obligations – and keeping good records.

“Keeping accurate records is critical. Your sharing platform should be able to provide you with accurate records of the income and the kilometres travelled for sharing purposes, which would form a good basis for your deductions,” Anderson said.

“In terms of expenses, we recommend you use the myDeductions tool in the ATO app. The information can then be sent directly to the ATO or to your tax agent for pre-filling at tax time.”

For those keen to game the system, the ATO has a message… or maybe we should call it a threat. Apparently it has “sophisticated systems and data to help identify where sharing platforms are being used to generate income”.