ASX ANNOUNCEMENT
27 AUGUST 2020
CARLY CAR SUBSCRIPTION SECURES FAVOURABLE TAX RULING FOR ITS SUBSCRIBERS
Collaborate Corporation Limited (ASX:CL8) (Collaborate or the Company) is pleased to announce that Carly car subscription has secured a product ruling from the Australian Taxation Office (ATO) that provides a clear framework for Carly subscribers using cars for business or work purposes to claim tax deductions (the ATO Product Ruling). The ATO Product Ruling is exclusive to Carly and sets the benchmark for the car subscription category. It does not provide coverage to any other car subscription offerings. As a result, Carly is the only car subscription offering that can currently provide certainty of tax deductibility on car subscription payments.
Because Carly’s subscription model differs from a traditional lease or loan model, the Company worked with the ATO to obtain a product ruling on its car subscription service. The ATO Product Ruling (PR 2020/11), which applies from 26 August 2020, ensures subscribers can claim the car subscription payments as a tax deduction when the subscription is used for business or work purposes. Importantly the ruling covers individuals as well as businesses, which will be critical as Carly extends its offering into the significant business market.
The ATO Product Ruling is specific to Carly and provides a number of benefits for individuals and businesses as set out below.
- Individuals can claim Subscription Fee payments as a deduction in their income tax return if the vehicle is being used for business or work purposes, including carrying out business travel between two places of work, or in the course of employment but not for private purposes.
- Businesses that use Carly can claim the full dollar amount of the Subscription Fee as a deduction if the cars are used in carrying out business and/or provided to employees for their usage. Fringe Benefits Tax (FBT) is payable in respect of the portion of private usage by an employee.
- Businesses that reimburse employees can claim a deduction for the full dollar amount of all the Subscription Fees reimbursed to employees for the period of the subscription, as long as the car is used for business (which will be the case where the car is provided to an employee). The Subscription Fees will be subject to FBT if the expense is reimbursed by the business to the employee. A car fringe benefit will not arise under this scenario, but the reimbursement would be an expense payment fringe benefit.
The certainty provided by the ATO Product Ruling is very significant as it does not apply to any other car subscription services 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.
A full outline of the ATO Product Ruling and more information regarding calculating car fringe benefits can be found at the following link: http://Carly.co/tax-benefits
Carly CEO Chris Noone commented: “Carly is always looking for ways to innovate and improve its service. The ATO Product Ruling comes at the perfect time, when working Australians and Australian businesses are looking at ways to increase their flexibility, de-risk finances and save on household or business budgets in the wake of COVID-19”.
The Company believes this will be a key product differentiator for Carly in the car subscription category and will use the ATO Product Ruling to provide certainty to businesses and to support its focus on securing market share in the business vehicle market.
“Car subscription is a hot topic right now. We recently conducted research with Omnipoll* and found 38% of Australians would consider subscribing to a car rather than purchasing or leasing a vehicle. The financial pressures created by COVID-19 were found to be a key factor in consumer attitudes towards car subscription, with 18% of Australians more likely to consider subscription as the best way to obtain a car compared to six months ago,” explained Mr Noone.
Carly is an alternative to car purchase and provides a lower risk option for consumers and businesses that require cars but do not want to take on long-term financial obligations. Carly offers access to a range of new and used vehicles including insurance, registration and maintenance packaged into a single monthly payment with no long-term commitments.
* OmniPoll research was conducted in June 2020 on behalf of Carly and surveyed a sample of 1,228 people aged 18+. Data was post-weighted to Australian Bureau of Statistics Census data.
Authorised by:
Chris Noone
CEO and Director
Collaborate Corporation Limited
For more information please contact:
Chris Noone
CEO and Director
Collaborate Corporation Limited
E: shareholder@collaboratecorp.com
Jane Morey
Morey Media
M: 0416 097 678
About Collaborate Corporation Limited
Collaborate Corporation Limited is listed on the Australian Securities Exchange (ASX:CL8). It is Australia’s leading listed company focused on providing innovative mobility solutions for consumers and the automotive industry. Collaborate operates www.DriveMyCar.com.au Australia’s leading peer-to-peer car rental business, and www.Carly.co, Australia’s first flexible car subscription service, supported by our proprietary PeerPass trust and reputation platform.