The short answer: yes, cost-sharing carpooling is legal in Australia. If you share a car with someone and they contribute to the cost of the trip — fuel, tolls, running costs — that is a private cost-sharing arrangement, not a commercial passenger service. No licence required, no permit, no special insurance beyond your standard policy.
The longer answer is that the legal landscape across Australia's states and territories is not uniform, and the line between legal carpooling and illegal ride-hailing is one you need to understand before you start charging passengers for rides. This guide explains where that line sits, how each state approaches the question, what the ATO says about income, and what countries like France have done to build a thriving legal carpooling sector at scale.
The key distinction: cost recovery vs commercial gain
The legal question in every Australian jurisdiction comes down to a single principle: are you recovering costs, or are you making money?
Ride-hailing services like Uber and DiDi are regulated as commercial passenger services because drivers make a profit from each trip — they charge more than the cost of providing the ride. That's what triggers the licensing regime: the requirement to hold a booking service provider authorisation, a driver accreditation, and so on.
Genuine carpooling is different. The driver is already making the trip. The passenger contributes a share of the costs the driver would incur regardless — fuel, oil, tyre wear. Neither party profits. The driver gets to work for less money. The passenger gets a ride for less money than driving alone. This is a cost-sharing arrangement, not a commercial service.
Herdy is built entirely around this distinction. Passenger contributions are capped at the ATO cents-per-kilometre rate — 91 cents per kilometre for 2026–27 — divided equally among all occupants including the driver. This means drivers never recover more than their actual running costs. There is no profit. There is no commercial service.
The legal position by state and territory
| State / Territory | Governing legislation | Carpooling status |
|---|---|---|
| Victoria | Commercial Passenger Vehicle Industry Act 2017 | LEGAL Cost-sharing explicitly excluded from commercial passenger service definition |
| Queensland | Transport Operations (Passenger Transport) Act 1994 | LEGAL Private cost-sharing arrangements excluded from the passenger transport framework |
| South Australia | Passenger Transport Act 1994 | LEGAL No commercial element = no licensing requirement |
| Western Australia | Transport (Road Passenger Services) Act 2023 | LEGAL Cost-sharing excluded from regulated passenger services |
| ACT | Road Transport (Public Passenger Services) Act 2001 | LEGAL Genuine cost-sharing not a public passenger service |
| Tasmania | Passenger Transport Services Act 2011 | LEGAL Private cost-sharing arrangements not regulated |
| Northern Territory | Traffic Act | LEGAL No specific carpooling regulation; cost-sharing falls outside commercial transport |
| New South Wales | Point to Point Transport (Taxis and Hire Vehicles) Act 2016 | EVOLVING Regulatory framework under active review; Herdy operates in compliance with applicable rules in each jurisdiction where it is active. |
What the ATO says about carpooling income
The Australian Taxation Office has clear guidance on this. If you receive payment from passengers that covers your actual costs of the trip — and nothing more — it is not assessable income. You are not running a business. You are recovering expenses.
The ATO's cents-per-kilometre rate (91¢/km for 2026–27) exists precisely to give taxpayers a simple way to calculate vehicle running costs without keeping detailed records. When Herdy uses this rate as the ceiling for passenger contributions, it is using the ATO's own methodology to define cost recovery.
Where carpooling does become a tax issue is if you consistently make a profit — charging more than your costs — or if you do it at commercial scale. That's ride-hailing, not carpooling, and it triggers GST registration, income tax obligations, and the commercial licensing regime.
What your car insurance covers
Standard Australian comprehensive car insurance policies cover cost-sharing carpooling in most cases — because you are not operating a commercial vehicle. The key question your insurer will ask is whether you are carrying passengers for commercial gain. If the answer is no — if you are recovering costs, not making money — most policies cover you.
However, policies vary. The safest approach is to:
- Check your policy wording for "commercial use" or "hire and reward" exclusions
- Contact your insurer and ask directly: "Am I covered if I share my commute with a colleague and they contribute to fuel costs?"
- Keep passenger contributions at or below ATO rates to stay clearly within cost-recovery territory
Most major Australian insurers — NRMA, RACV, AAMI, Budget Direct — cover genuine cost-sharing arrangements under standard policies. Some have explicit carpooling endorsements.
How France built a legal carpooling sector at scale
Australia is not the first country to grapple with how to regulate carpooling platforms. France provides the clearest model for how to get this right — and it's directly relevant to where Australia's regulatory conversation is heading.
BlaBlaCar launched in France in 2006 and operates legally as a carpooling platform intermediary — not a transport operator. It matches drivers with passengers for long-distance trips. Drivers recover costs. BlaBlaCar takes a small platform fee. As of 2024, BlaBlaCar has over 100 million members across 22 countries.
The legal framework that enabled this is France's Loi d'Orientation des Mobilités (LOM) 2019 — the Mobility Orientation Law. Article L.3132-1 of the Code des Transports explicitly defines carpooling as a private arrangement for cost-sharing, distinct from commercial passenger transport, and permits platform intermediation fees that facilitate the matching without converting the arrangement into a commercial service.
"Carpooling is defined as the use of a motor vehicle by a driver for private purposes, to transport one or more passengers for the same trip, and in exchange for cost-sharing." — Article L.3132-1, Code des Transports (France)
This single legislative clarification unlocked a multi-billion euro carpooling sector. France now has government-subsidised carpooling incentives, dedicated motorway rest stops for carpooling meetups, and over 1 million daily carpooling trips.
Other European countries have followed similar paths. Germany, Belgium, the Netherlands, Spain and Portugal all have active legal carpooling markets with platform intermediaries operating at scale. The common thread: clear legislative definition of cost-sharing as distinct from commercial transport.
Where Australia is heading
Australian transport law is evolving. Several state governments have identified carpooling as a tool for congestion reduction and emissions abatement, and there is growing political interest in providing a clearer legislative framework — similar to France's LOM 2019 — that explicitly enables platform-facilitated carpooling.
The federal government's support for carpooling as a fuel-saving measure, reflected in the "Every Little Bit Helps" campaign of 2026, signals that the policy direction is toward enabling carpooling, not restricting it.
Herdy is actively engaged in this policy conversation — with state transport departments, MPs, and regulators — to help shape a framework that gives commuters clarity and confidence.
The practical bottom line
If you are sharing your regular commute with someone and they contribute a fair share of your running costs, you are doing something legal in virtually every Australian jurisdiction. You are not operating a taxi. You are not running a ride-hailing service. You are sharing a car and splitting the cost — something Australians have done informally for decades.
Herdy simply makes the matching, payment, and trust infrastructure work — so the arrangement that used to require knowing the right person in the right suburb can now happen between verified strangers going the same way.
