How to claim a tax return on your caravan

For many people, the last thing they could ever claim on tax is their RV. The RV lifestyle is all about leisure time, not work time, right?

Yet being able to legitimately submit tax expenses for RV or tow vehicle expenses has grown. Not only are there peer-to-peer renting platforms that introduce tax deduction on rental earnings, but also government asset write-off incentives for small business to make buying an RV for business a more attractive proposition.

No work, no deductions

Any RV-related tax deduction is of course only relevant if the purchase and ongoing costs are related to you earning income; clearly, buying and operating a 4WD and a caravan solely for the purposes of having family holidays or the big around-Australia retirement trip are obviously not sufficient grounds for claiming related expenses.

However, there are growing numbers of income situations that are legitimate circumstances for you to claim some or all of your RV or vehicle expenses.

Note that this article is general in nature: we’re giving you pointers to think about, not by any means precise taxation advice for your particular income tax situation. Always get advice from your registered tax agent before going ahead with any outlay related to an RV or vehicle that you believe might incur a tax benefit.

Where you can claim expenses

Broadly speaking, there are two avenues where you might be able to claim some or all of your RV and tow vehicle expenses on tax. These include renting them out on, for example, a peer-to-peer sharing platform like Camplify, or when you are using the tow vehicle and/or RV for other business purposes, such as working at a remote Outback site where there is little or no accommodation, or the RV is sign-written, advertising your business. Or perhaps using it to generate an income on social media...

Renting out an RV or vehicle

If you own or are about to buy a vehicle and/or an RV for private use but also want to earn some money renting it, such as on a peer-to-peer platform like Camplify, or perhaps as a vehicle for the likes ride sharing platform Uber, then you should be able to claim deductions on the business use.

Be aware that if you rent out your RV or vehicle to family, friends or relatives for less than market rates, you can only claim expenses up to the amount you received from the rentals.

Some expenses can be 100 per cent deductible, such as advertising costs for hiring out the RV and/or vehicle, cleaning costs between rentals and any transport costs associated with getting the vehicle and/or RV to and from the person renting it, such as fuel, tolls and so on.

From here on in, calculating expenses can get a bit more complicated for mixed business/pleasure use, and you should seek advice on precisely how to calculate amounts you can claim. But you should be able to claim at least a percentage of costs such as maintenance, insurance and registration according to how much business (rental) use the vehicle and RV have had.

You can only claim a percentage of such costs of when the vehicle or RV was being hired out versus when it is unavailable for hire, or actually being used for private/holiday purposes. Best to get a tax agent to advise on how best to do this.

The ATO says to keep records of all such income and expenses (make sure you keep receipts) and, while it should go without saying, declare all income and only claim expenses you're entitled to as income tax deductions.

Other RV business deductions

There are other situations not relating to renting where an RV or tow vehicle can be used as a business deduction. For example, small businesses may be able to claim a vehicle or RV deduction when it is being used when travelling for work, as accommodation or a mobile office. A travelling salesperson, photographer or casual mine worker, for example, could legitimately use a camper or caravan as a promotional tool (with sign-writing perhaps) which could then be claimed as a work expense on your income tax.

There might also be an opportunity to claim tax deductions on your vehicle and RV if you do not have a primary residence or fixed address and are travelling and working from your RV. However, you should get professional tax advice to get clarity on this before attempting any tax deduction.

Asset write-off

The glory days of ‘temporary full expensing’ (TFE), or the federal government’s  Instant Asset Write-Off (IAWO) tax break scheme for ABN holders, are well and truly over.

From July 1, 2023, the new instant asset write-off came into effect, meaning any assets purchased on or after that date and valued at over $20,000 will need to be deducted over several years instead of in one go, at a rate of 15 per cent depreciation for the first year and 30 per cent for each subsequent year.

Do you need an ABN?

You probably don’t need to have an ABN if you have one RV for occasional rental on a peer-to-peer sharing platform, but where it gets cloudy is if you’ve decided to get into the RV or vehicle hire business and buy more vans and make them available for much or all of the time for rental.

Seek advice about your circumstances, but if it’s more evidently a business operation to make a profit, rather than a low-income part-time hobby, it might be time to consider getting an ABN.

As an aside, you should clarify with your tax agent the specifics of the registration and insurance type you need (private or business) where the RV is used primarily as a business tool, whether that is either for renting it out or for living in while you work at a remote mine site, for example.

Note that for peer-to-peer sharing platforms, the platform provider often insures the RV or vehicle during the time it is being hired out as part of the fee you pay them to use the platform.

Don’t expect a money shower

Remember that any RV-related tax deduction does not automatically mean the government has effectively paid for your RV or tow vehicle, even if it is a ‘100 per cent’ deduction.

What it might mean is that the deduction reduces the amount of income tax you have to pay, but it is unlikely that it will be reduced by the full cost of the RV. It’s not as though for every dollar you spend on an RV, the government automatically gives you a dollar back.

Depending on your circumstances (again, check with your tax agent) the deductions might (or might not) result in you getting something like 30 cents in the dollar back.

If you're on a pension or other government benefits, also be aware any income from hiring out your vehicle or RV might effect these benefits.