Carly Car Subscription provides tax benefits for individuals and businesses

Car usage continues to evolve as businesses seek solutions that provide flexibility and cost savings for their specific needs. Carly car subscription is an alternative to a car loan or car lease that provides access to cars without long-term financial commitment.

To help provide clarity to our Subscribers, Carly has secured a Product Ruling (PR 2024/14) from the Australian Taxation Office that provides a clear framework for Carly subscribers using cars for business or work purposes to claim tax deductions. Carly is the only car subscription offering that can currently provide certainty of tax deductibility on car subscription payments as the ATO Product Ruling only applies where an arrangement is implemented strictly in accordance with the rules reviewed by the ATO. This ruling only applies to individuals and businesses that have entered into a Carly Car Subscription agreement.

This information is general in nature. You should consult a professional tax advisor to discuss your specific circumstances.

Your Situation

As an individual using Carly, you can claim your Car Subscription Fee payments in your income tax return for the period of subscription if you are using the vehicle for business or work purposes. This includes:

• carrying on your business, or
• travel between two places of work or in the course of your employment and not for private purposes.

For the purpose of Individual tax benefits, subscription is categorised into two time periods; short-term subscription and long-term subscription. The method under which you can claim differs depending on the length and category of your subscription.

Your Situation

• Your business is incorporated as a company, or is established as a trust;
• Your business has a Carly Car subscription and is making the Subscription Fee payments out of its own profits; and
• Your business provides the cars to employees for private and / or business use.

Income Tax
Your business can claim the full dollar amount of all Subscription Fee payments in its income tax return, for the period of subscription, as long as the vehicles are used in carrying on your business and/or provided to your employees.

A business will normally be subject to fringe benefits tax (FBT) where a car is provided to an employee for their private use. This may include, for example, where the car is used on work sales trips, but can also be used for personal trips.

For the purpose of Business tax benefits, subscription is categorised into two time periods; short-term subscription and long-term subscription. The method under which you can claim differs depending on the length and category of your subscription.

Your Situation

• Your business is incorporated as a company, or is established as a trust;
• Your business has a Carly Car subscription and pays the Subscription to Carly out of its own profits;
• Carly arranges a car subscription between a third party fleet owner and your employees; and
• The fleet owner provides the car directly to your employee.

Income Tax

Your business can claim the full dollar amount of all Subscription Fee in its income tax return, for the period of subscription, as long as the cars are used in carrying on your business. This will be the case where you provide the cars to your employees for their use.

Fringe Benefits Tax

A business will normally be subject to FBT where a car is available for private use by an employee. This may include, for example, where the car is used on work sales trips, but can also be used for personal trips.

As the car is provided by the fleet owner under this scenario, under an arrangement that you are a party to, a car fringe benefit will arise regardless of the duration of the subscription period.

Your Situation

• Your business is incorporated as a company, or is established as a trust;
• Your business has a Carly Car subscription and pays the Subscription to Carly out of its own profits;
• Carly arranges a car subscription between a third party fleet owner and your employees; and
• You reimburse the employee for their Subscription Fees paid to Carly.

Income Tax

Your business can claim the full dollar amount of all Subscription Fee payments that it has reimbursed to your employees in its income tax return, for the period of subscription, as long as the cars are used in carrying on your business. This will be the case where you provide the cars to your employees.

Fringe Benefits Tax

A business will normally be subject to FBT where an expense is reimbursed by a business on behalf of an employee. A car fringe benefit will not arise under this scenario. An expense payment fringe benefit will arise regardless of the duration of the subscription period.

FBT Calculation – Expense Payment Benefits

Broadly, FBT will be calculated using the full dollar amount of the Subscription Fees reimbursed by the business.

The FBT may be reduced to the extent the payments would be otherwise deductible to the employee in accordance with the FBT rules.

More information regarding calculating expense payment fringe benefits and relevant exemptions or reductions (if any), such as the “otherwise deductible rule” can be found here.

The complete ATO Product Ruling (PR 2024/14) can be viewed here.