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.
Your car rental company may claim deduction on expenses incurred on private hire cars that are rented out to customers, subject to Sections 14 and 15 of the Income Tax Act (ITA). Capital allowances may also 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. However, unutilised losses and unutilised capital allowances can be carried forward to be deducted against income derived from the same business of car rental activities in subsequent Years of Assessment (YAs), subject to Sections 23(4) and 37(12) of the ITA.
Unutilised losses and unutilised capital allowances remaining upon the cessation of the car rental business will be disregarded.
The requirement to quarantine the income from the car rental business does not apply to unutilised losses and unutilised capital allowances relating to YA 1999 and before. Therefore, such unutilised losses and unutilised capital allowances are available for deduction against other income derived by your car rental company.
If your car rental company carries on other businesses, you 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.
Learn more about your company's record keeping requirements.