Tax and the shared economy, what you need to know?

With the end of the financial year upon us and the ATO being clearer than ever on what they want to see from owners hiring out their RV’s, we asked Andrew Pollock of Pollock Partners, a former ATO officer, what we need to be considering when it comes to completing your tax return.

Do I have to declare the money I make from hiring my campervan in my tax return?

Yes. Any income earned from hiring out a campervan, motorhome or caravan will be assessable to the person or entity who owns the RV. If the vehicle is owned personally, then the income is included in that person’s tax return at the end of the year, along with any other income they have earned during the year.

Can I claim deductions against the income I receive from hiring out my vehicle?

Yes. Any expenses incurred in earning an income via the shared economy will be an allowable deduction. These expenses may include: repairs and maintenance; registration fees; cleaning expenses; storage costs; depreciation on the purchase price of the vehicle; interest on any loan taken out to purchase the RV; and costs to transport the vehicle to and from a booking. It is very important that you keep adequate records of all expenses incurred against your hired income.

What if my RV is used partly for hire and partly for private use?

If the vehicle is not used 100% for hire, then you need to apportion the expenses based on the income earning use of the campervan, motorhome or caravan. For example, if the vehicle is used 60% for Hire purposes, you can claim 60% of the relevant expenses. Any expenses that relate 100% to the hire income, will be claimed in full (for example, cleaning costs after hiring the RV).

What if I don’t declare the income? How will the Tax Office know how much I earned?

The Tax Office has sophisticated data matching software. This means almost all income reported to shared economy platforms will be matched to taxpayers. For example, the tax office is already matching information from Uber and AirBnB. If you don’t declare your Camptoo income, the Tax Office will eventually amend your return to include the income. You will get charged interest and maybe even a penalty. Worse still, the Tax Office will make it hard for you to claim expenses against the matched income, particularly if you haven’t kept adequate records of the expenses.

Do I have to get an ABN and Register for GST?

If you are running an enterprise of hiring out your campervan, you probably need to apply for an Australian Business Number (ABN). If you already have an ABN, you will use that number, unless you will be running your business in a different entity (for example, a Company or Trust). You will need to register for GST if your turnover (including any GST) is $75,000 or more. If you won’t turn over $75,000, you can still register for GST on a voluntary basis. You may want to do this to claim the GST on the purchase of an RV.

What is the best way to own my RV? Should I start a Company or set-up a Trust?

The choice of owner will depend on a number of factors, including what income you already earn and whether you want to protect your assets should anything go wrong with your vehicle hire arrangements. We always recommend getting professional accounting advice before making this decision.

Should I get an Accountant to help me with my record keeping and tax?

We always recommend getting professional advice where you are carrying on a business. Income tax laws can be very complex and dealing with the Tax Office can be even more so.

Thanks Andrew. If you want to know more on the ATO’s position you can go to their website here. If you are looking for more detailed advice, please contact your personal accountant or someone from Andrew’s team.

Happy trails

Andrew

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Pollock Partners is an accounting firm specialising in taxation services and advice for small business. With an extensive background in taxation services, that includes a combined 30 years with the Australian Taxation Office, they assure that their clients will get the best possible taxation advice, without paying for the high overheads of larger firms. Pollock Partners’s goal is to provide their clients with high quality, value for money tax and accounting, services and advice.

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