Car Rental Companies

A car rental company refers to a company that rents out private hire cars for a fee. These private hire cars are described as “Private Hire” in the Vehicle Log Card.

A car rental company is able to claim deduction on all expenses incurred on private hire cars that are rented out to customers. Capital allowances may be claimed on the cost of acquiring such private hire cars. 

The income generated from car rental activities is to be quarantined, i.e. losses and capital allowances arising from such activities cannot be deducted against other income. Such unutilised losses and unutilised capital allowances may be carried forward to be deducted against income derived from the same business of car rental activities in subsequent years of assessment, subject to Sections 23(4) and 37(12) of the Income Tax Act. Should the car rental business cease, unutilised losses and unutilised capital allowances remaining at the point of cessation will be disregarded.

The requirement to quarantine the income from car rental business will not apply to unutilised losses and unutilised capital allowances relating to YA 1999 and before. Therefore, such unutilised losses and unutilised capital allowances will continue to be available as deduction against other income derived by the car rental companies.

Car rental companies which carry on other businesses are required to keep separate records and accounts to enable the income and expenses relating to the car rental business to be readily identified and ascertained separately from the income/ expenses of the other businesses.