Sharing economy tax reporting coming soon

The days of people making money through sharing or gig economy digital platforms and not paying tax on it are numbered.

Starting next year, platform operators (e.g. Uber, Deliveroo, Airtasker) will be required to collect and report information on Australians who receive an income through their platform.

The Australian Taxation Office (ATO) will then data-match the reported income of these individuals and businesses with income reported from other sources.

This will help the ATO identify sharing-economy participants who are not reporting their full income or paying the right amount of tax.

This includes income tax, GST on ride sharing (the ATO considers all ride sharing a taxi service, so GST applies) and capital gains tax on the sale of property used to earn income (e.g. Airbnb).

The new reporting regime was a recommendation of the Black Economy Taskforce, which found Australia’s black economy had created an unfair playing field for honest taxpayers.

The taskforce attributed sharing-economy participants’ failure to report their full income to a lack of awareness of their tax obligations or deliberate underreporting.

What is the sharing economy?

The sharing economy allows people to take advantage of assets they possess and rent them out to people who need them.

The gig economy is when a person offers their services on a part-time or casual basis.

The ATO does not distinguish between the two, referring to them collectively as the sharing economy.

This sharing or loaning of assets and provision of services is typically done via a digital platform (such as a website or an app).

The buyer and seller get in contact with each other via the platform, enter into an agreement for the supply of goods and/or services, and the platform facilitates payment.

Popular sharing-economy activities include:

• ride-sourcing (also known as ride-sharing) — transporting passengers for a fare (e.g. Uber, Hi Oscar, Shebah, GoCatch)
• renting out all or part of a home on a short-term basis (e.g. Airbnb, HomeAway, Flipkey)
• sharing assets, including cars, caravans/RVs, car-parking spaces, storage space and personal belongings (e.g. Camplify, Car Next Door, Spacer, Toolmates, Quipmo)
• providing personal services, including graphic design, website development, food and parcel delivery, cleaning and running errands (e.g. OneFlare, Mad Paws, Hark Hark).

According to a consultation paper published by The Treasury, Australia’s sharing economy was worth about $15.1 billion in February 2017; and from July to December 2017, an estimated 10.8 million Australians were predicted to earn extra money from it.

How will the reporting work?

According to The Department of Treasury, the ATO will specify what information relating to the seller’s identity and transactions will need to be reported.

At a minimum, this will include identity information, bank account details, ABN, total payments (net and gross), GST on payments, etc.

Only the aggregate (total) of transactions relating to the seller over the reporting period will need to be provided; platform operators will not be expected to provide information on a per-transaction basis.

Information will need to be reported via an ‘approved form’ set by the ATO, which has indicated this form will include a validly generated XML file.

The ATO has indicated it will initially require reporting on a biannual basis (1 July–31 December, 1 January–30 June), with information to be reported by 31 January and 31 July respectively.

At a minimum, this will include identity information, bank account details, ABN, total payments (net and gross), GST on payments, etc.

The reporting regime will be implemented in two phases, as follows:

From 1 July 2022: Ride-sourcing and short-term accommodation transactions.

From 1 July 2023: All other reportable transactions, including food delivery and task-based services (but excluding transactions where only the title or ownership of goods or real property are exchanged).

Get expert advice

Do you earn an income via a sharing or gig economy digital platform? If so, we recommend seeking professional advice to help you maximise income generated on these platforms in a tax-effective way.

Contact us for a complimentary consultation at info@modoras.com or 1300 888 803. We’ll take care of you.

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