Treat carpooling as a non-commercial activity

According to the General Insurance Association of Singapore, carpooling under the Road Traffic (Car Pools) Exemption Order is deemed as "hire and reward", and therefore violates the "limitation to use" condition for private-car insurance usage (Carpooling breaches private-car insurance condition; May 5).

The Inland Revenue Authority of Singapore (Iras) states that income derived from providing chauffeured ride services, via mobile applications/platforms operated by third parties, are subject to tax even if the driver does it on a casual basis.

However, carpooling websites generally state that the fares carpool drivers collect are meant to cover their fuel costs, and are not meant to be a source of income and, hence, the drivers need not declare the amount.

Is carpooling done under the Road Traffic (Car Pools) Exemption Order a taxable activity? Are there any exceptions, such as if the ride was not for profit?

If carpooling is to reduce carbon footprint and is a social good, can the Ministry of Environment and Water Resources work with the Land Transport Authority, Iras, insurers and other authorities to make carpooling a non-commercial activity?

Parents who use such apps to fetch other people's children to school probably didn't know that they have become tax evaders or violated their employment obligations.

With the receipts being tax exempt and carpooling not considered moonlighting, private car drivers would be able to carpool with their current insurance.

Parents who use such apps to fetch other people's children to school probably didn't know that they have become tax evaders or violated their employment obligations.

Alternatively, the LTA could work with the ride-sharing operators to implement a non-commercial carpool mechanism.

The fare to the drivers could be directed to the LTA Cares Fund. Drivers who choose to put their fares into this fund may get tax relief, and needy passengers can tap the fund for fares.

Cho Hon Loon

A version of this article appeared in the print edition of The Straits Times on May 09, 2017, with the headline 'Treat carpooling as a non-commercial activity'. Print Edition | Subscribe