Understanding the 305 Day Rule for Motorhome and Caravan Rentals

Sep, 29 2025

305 Day Rule Tracker

This tool helps you track your rental days and determine whether you've crossed the 305-day threshold for GST registration.

Rental Start Date: Rental End Date:

Ever wondered why some motorhome hire companies suddenly ask for extra paperwork after a certain period? The answer often lies in the 305 day rule. It’s a tax‑and‑licensing threshold that can turn a casual weekend getaway into a full‑blown business obligation. In this guide we’ll break down exactly what the rule is, who it affects, and how to stay on the right side of the law while you’re out on the road.

Quick facts

The 305 day rule applies to rental of motorhomes, caravans and similar recreational vehicles in Australia.
If a vehicle is hired out for more than 305 days in a 12‑month period, the owner must register as an accommodation provider for GST purposes.
Below the threshold, rentals are treated as a hobby activity and are generally GST‑free.
Accurate record‑keeping of each hire day is mandatory once you cross the limit.
Non‑compliance can lead to penalties from the Australian Taxation Office (ATO).

What is the 305 day rule?

305 day rule is a regulation that determines when the rental of a motorhome or caravan shifts from a hobby activity to a taxable accommodation service. It was introduced by the Australian Taxation Office to ensure that frequent rental operators contribute GST and meet licensing requirements.

Why the rule matters for renters and owners

If you’re a weekend adventurer hiring a motorhome a few times a year, the rule probably never reaches you. But for those who run a small hire business, or even owners who rent out their personal vehicle regularly, crossing 305 days changes the tax landscape dramatically. Suddenly you need to:

Register for GST and charge an extra 10% on each hire.
Include your rentals in Business Activity Statements (BAS).
Maintain detailed logs of each rental day, including dates, renter details and fees collected.

Failing to do so can result in the ATO issuing an audit notice, adding interest and penalties that could eat into any profit you thought you were making.

Legal thresholds and tax implications

The 305‑day cut‑off is calculated on a rolling 12‑month basis, not a calendar year. This means you must look back 365 days from any given date and count the total rental days. For example, if you hit 306 days on 15July2025, you’ll be liable for GST from that very day forward.

Key tax points:

GST registration: Once the threshold is crossed, you must register for GST within 21 days.
Taxable supply: Each rental is considered a taxable supply of accommodation services.
Input‑tax credits: You can claim GST paid on expenses directly related to the rental (fuel, maintenance, insurance).

Notice that the rule does not affect the vehicle’s road tax or registration; those remain unchanged.

How to calculate your rental days

Keeping an accurate count is easier than you think. Follow these steps:

Create a simple spreadsheet with columns for Rental Start Date, Rental End Date, and Days Hired.
Use the formula =END_DATE-START_DATE+1 to auto‑calculate days for each entry.
At the end of each month, sum the Days Hired column and add it to the total from the previous 11 months.
If the cumulative total reaches 306, flag the date and begin GST registration procedures.

Many owners opt for dedicated rental software; these often have built‑in 305‑day alerts that pop up when you’re close to the limit.

Below 305 days vs. Above 305 days

Key differences before and after crossing the 305‑day threshold
Aspect	Below 305 days	Above 305 days
GST status	Not required to charge GST	Must register and charge 10% GST
Record‑keeping	Simple logs sufficient	Detailed daily logs for BAS reporting
Insurance	Standard personal motorhome cover	Commercial hire insurance often mandatory
Compliance risk	Low - treated as hobby activity	Higher - subject to ATO audits and penalties
Input‑tax credits	Not applicable	Can claim GST on eligible expenses

Common pitfalls and how to avoid them

Even seasoned hire operators stumble over a few traps:

Rolling‑year miscalc: Counting calendar year instead of the previous 365 days can lead to an unexpected breach.
Mixing personal and hire use: If you also use the vehicle for personal trips, those days still count toward the 305 total.
Late GST registration: The ATO imposes a 21‑day grace period; missing it adds interest charges.
Inadequate insurance: Commercial policies have different coverage limits; relying on personal insurance can void a claim.

To stay safe, set calendar reminders when you approach 250 days, and run a quick audit of your logs every quarter.

Tips for renters and owners

If you’re an owner thinking about renting out your motorhome:

Start with a clear rental agreement that outlines who is responsible for GST if the threshold is crossed.
Consider a partnership with a hire company that already handles GST and insurance.
Track each hire day meticulously from day one - the habit is easier than fixing a backlog later.

For renters, ask the hire company:

“Are you GST‑registered?” - If the answer is yes, you’ll see an extra line item on the invoice.
“How many days have you rented this vehicle this year?” - Transparency helps you avoid hidden costs.

Being aware of the rule protects both parties from surprise fees and legal headaches.

Frequently Asked Questions

What happens if I accidentally exceed 305 days?

You must register for GST within 21 days of the breach. The ATO may assess GST on past rentals, but you can usually negotiate an arrangement if it’s a first‑time error.

Does the rule apply to short‑term holiday parks?

Only if the park rents out motorhomes or caravans as part of its accommodation offering. Pure campsite fees without a vehicle hire are not covered by the rule.

Can I reset the count by changing the vehicle’s registration?

No. The rule follows the vehicle, not the registration number. Switching plates won’t erase the rental days already logged.

Is the 305‑day rule the same in every Australian state?

The threshold is a federal ATO guideline, so it applies nationwide. However, some states have additional licensing requirements for caravan parks, so check local council rules.

Do I need a separate GST account for each vehicle?

No. GST registration is at the business level. You can track each vehicle’s days separately, but you file a single GST return for the whole operation.