ATO and the 'Sharing Economy' Targets Uber & Airbnb

The Australian Taxation Office have announced they will be focusing on undeclared income derived by taxpayers from the ‘sharing economy’. The ‘sharing economy’ refers to income usually derived from buyers and sellers connecting through a facilitator (usually an app or a website) and this may include:

  • Renting a room or whole house for a short term (e.g. airbnb)
  • Taxi and travel services (ride-sourcing) for fare (e.g. Uber)
  • Provision of personal services such as professional or creative services (e.g. graphic designer, creation of websites, odd jobs, deliveries or furniture assembly)
  • Rental of a car parking space

Income earned through provision of the above services need to be declared when preparing individual tax returns. In addition to the non-declaration of income, the ATO will also be monitoring compliance issues such as taxpayers registering for GST or ABNs where necessary.

Specifically, a ride-sourcing service is providing a car available for public hire and individuals need to register for GST regardless of turnover (i.e. the $75,000 threshold for turnover for GST does not apply to ride-sharing services), register for an ABN, record and charge GST, provide a Tax Invoice when requested for fares over $82.50 and lodge a Business Activity Statement.

Individuals operating infrequently or non-commercially (e.g. car pooling where passengers provide petrol money or the service is provided without a profit making purpose) need not register for GST.

Provision of a room or house for short term stays does not attract GST as there is no GST payable on residential rent. Providers need to keep records of income and expenditure for inclusion in their tax return.

The ATO advises they have in excess of 600 million pieces of third party data to track activity and income and those that omit significant amounts of income will be caught.

If you engage in any of these activities and are not sure of the tax implications, please don’t hesitate to contact us.

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