Associate Lease
Tax Guide 2026

General Guide to completion of the 2026 Income Tax Return for Associate Lease Providers

Purpose and Scope

This guide assists an individual associate lease provider (the taxpayer) to complete the 2026 Individual Supplementary Tax Return in relation to an associate lease arrangement for a single vehicle.

It assumes the only business activity is providing a vehicle under an associate lease. If you conduct any other business activities, seek advice for your full return.

 This guide assumes the vehicle’s cost is below the car depreciation cost limit in the year of acquisition. For 2025/26 this is $69,674. Confirm the current ATO car cost limit applicable to the acquisition year before lodging.

This guide is for an individual. If the vehicle is jointly owned or held via a partnership, trust or company, different returns and disclosures may be required.

You should have an ABN if you are carrying on an enterprise. GST registration is required if your projected GST turnover across all enterprises is at least $75,000. If you are not registered for GST, you must not charge GST.

This is not tax advice. Your circumstances may differ. Seek advice for calculations (depreciation, balancing adjustments, GST) or if you have any uncertainty.

The responsibility for the accuracy of an income tax return rests with the taxpayer. This guide is provided for general information only and is not intended to constitute tax advice. Trinitas and JudsonKoman take no responsibility for taxpayers acting on, refraining from acting on, or relying on any information contained in this publication.

Lodgement Overview

You will generally complete both:

  • 2026 Individual Tax Return

  • 2026 Individual Supplementary Tax Return

This guide covers the Supplementary return (Business and professional items schedule 2026).

If registered for GST, ensure your BAS are completed and consistent with your return.

Any PAYG instalments are claimed in the main return.

Supplementary Tax Return –
Part 15: Net income or loss from business

Business and Professional Items Schedule 2026 — Key Items

   P1

Personal Services Income (PSI)

Associate lease income is generally not PSI because it is derived from the use of an asset rather than your personal efforts. Answer “No.”

P2

Main Business or Professional Activity

Description: Motor vehicle hiring, leasing or renting (except licensed hire cars or taxi cabs).

Include the 4‑digit Business industry code. Example: 6611 Passenger car rental and hiring. Confirm the 2026 ATO Business industry code list.

  P3

Number of Business Activities

Generally “1” for one associate leasing activity. Multiple vehicles under one associate leasing activity are still usually a single activity.

P4

Status of Business

Select “Commenced” if it commenced during the year and “Ceased” if it ceased. Where requested, provide the relevant dates.

P5

Business Name and ABN

Use the individual’s legal name or registered business name (if any) as per ABR/ASIC. Include the ABN for this activity.

P6

Business Address

Usually your residential address. Note: ABR may display your business address; consider an appropriate service address if permitted.

P8

Business Income and Expenses (Non‑Primary Production)

Classification: Non‑primary production.

Income to declare:

  • Include the lease payments derived during the income year.
  • If registered for GST: report the GST‑exclusive amount as income.
  • If not registered for GST: report the full amount received (you must not charge GST).

Expenses you may claim (generally on the same GST basis as your income):

 

  • Lease payments if you are leasing the vehicle and then sub‑leasing it (deductible as lease expense). If registered for GST, claim the GST‑exclusive amount.

 

    • Interest on loans (including hire purchase or chattel mortgage) used to acquire the vehicle.
    • Decline in value (depreciation) of the vehicle under the capital allowance rules. Apply the car cost limit to determine the maximum depreciable cost; use GST‑exclusive cost if registered for GST, otherwise GST‑inclusive. Choose a method (diminishing value or prime cost) and an effective life per ATO determinations (confirm current effective life).
    • Running costs paid by you that are not reimbursed by another party (e.g., registration, insurance, servicing, tyres). If the employer pays running costs under the salary packaging, you cannot claim them.
    • Repairs and maintenance you pay. Distinguish capital improvements (added to cost base/depreciation) from deductible repairs.

       Apportionment:

    • If the vehicle is not continuously       leased or has any private use by you, apportion income and expenses (including depreciation and interest) to the income‑producing use.

       GST notes (if registered):

    • Leasing a car is a taxable supply; include GST on tax invoices and in your BAS.
    • Input tax credits on car purchases are capped to 1/11th of the car cost limit if the car’s price exceeds the limit.
    • Insurance stamp duty has no GST credit.

P9

Business Loss Activity Details (if P8 results in a loss)

Division 35 non‑commercial loss rules may defer the loss unless a test is passed or discretion applies. There is an adjusted taxable income threshold (currently $250,000 — confirm current law). Seek advice if you have a loss.

P10

Business Reconciliation Items

Typically not applicable for straightforward associate leasing. Check myTax prompts before skipping.

P13-17

Other Business Items

Typically not applicable for associate leasing. Confirm in myTax whether these appear and are relevant.

 

P18

Cost of Depreciating Assets First Claimed

Complete in the year you first claim decline in value for the vehicle (generally the purchase year).

Use the vehicle’s cost limited to the car cost limit. Use GST‑exclusive cost if GST‑registered; otherwise GST‑inclusive.

  P19

Small Business Entity and Concessions

Typically not applicable unless you meet small business criteria and are using relevant concessions. Seek advice before applying any concessions.

 

 P20

Termination Value of Assets Disposed Of

Complete if you disposed of the vehicle during the year (including sale, trade‑in, write‑off).

Termination value is generally the proceeds received (GST‑exclusive if registered).

Disposal may trigger a balancing adjustment and may have GST payable on the sale. Seek advice to calculate.

 

P21

Other Items

Typically not applicable to associate leasing. Confirm in myTax.

JK Transition Accounting Services Pty Ltd trading as JudsonKoman ABN 78 636 074 934. Liability limited by a scheme approved under Professional Standards Legislation.

Associate Lease Providers — 2026 Return Checklist

Confirm Your Setup

  1. ABN in your name for the leasing activity.
  2. GST registration considered: register if projected GST turnover (all enterprises) ≥ $75,000; otherwise do not charge GST.
  3. Executed associate lease agreement on commercial terms.

Collect Your Records (retain 5+ years)

  1. Lease/novation agreement(s)
  2. ABN and, if applicable, GST registration confirmation
  3. Tax invoices/receipts for all income and expenses
  4. Finance contracts and interest schedules
  5. Vehicle purchase invoice with GST details
  6. Depreciation schedule
  7. Running costs you paid (insurance, rego, servicing, tyres)
  8. Log/diary of availability and any private use/downtime
  9. Disposal documents (sale/trade‑in contracts, settlement statements.

    Prepare the Supplementary Return

    1. P1: PSI — No
    2. P2: Description + 4‑digit industry code (e.g., 6611 — confirm 2026 list)
    3. P3: Number of activities — 1
    4. P4: Status — Commenced/Ceased + dates if relevant
    5. P5: Business name and ABN
    6. P6: Business address
    7. P8: Non‑primary production income and expenses
      1. Income: lease receipts (ex‑GST if registered; full amount if not)
      2. Expenses: lease/interest, depreciation (apply car cost limit), insurance, rego, servicing, tyres
      3. Apportion if any private use/downtime
    8. P9: Loss? Seek advice — non‑commercial loss rules may defer it
    9. P18: First‑year depreciation — show vehicle cost (apply car cost limit; ex‑GST if registered)
    10. P20: Disposal — termination value (ex‑GST if registered); balancing adjustment/GST may apply
    11. Others (P10, P13–P17, P19, P21): Usually N/A — check myTax

      If You Are GST‑Registered (BAS Quick Guide)

      1. Issue tax invoices with GST
      2. G1 total sales; 1A GST on sales; 1B GST credits on purchases
      3. Car GST credits capped to 1/11th of the car cost limit if price exceeds the limit

      Final Checks

      1. Thresholds verified (car cost limit, LCT)
      2. Depreciation method chosen and applied consistently
      3. No expenses claimed where employer reimbursed
      4. Lease terms are arm’s length
      5. PAYG instalments claimed in main return
      6. Figures reconcile to BAS (if registered) and bank/records

      You can contact us at any stage to seek further advice or change your package – at no cost!

      P: 1300 836 025    E: salarypackaging@trinitas3.com.au