The individuals who participate in the share economy such as Uber, Deliveroo & Airbnb will no longer be able to escape their tax obligations as the government determines the implementation of a legislation for a new compulsory reporting regime.
The sharing economy is economic activity through a digital platform (such as a website or an app) where people share assets or services for a fee. If you are engaged in the sharing economy, your income and deductions need to be included in your tax returns.
Sharing economy activities include:
- ride-sourcing (also known as ride-sharing) – transporting passengers for a fare such as Uber
- renting out all or part of a home for a short-term basis such as Airbnb
- sharing assets, such as
- personal assets like boats, cars or caravans
- storage or business spaces like car parking spaces or offices
- personal belongings like tools or sports equipment
- providing services, like:
- delivering goods like food or parcels such as Deliveroo or Uber Eats
- performing tasks and activities for other people like odd jobs, cleaning or running errands
- providing professional services like web or trade services.
If you provide goods or services through digital platforms, your will need to chat to your accountant about how income tax, goods and services tax (GST) or any other tax may apply to your earnings.
If you are providing ride-sourcing services you must have an Australian business number (ABN) and register for GST, regardless of how much you earn.
This new reporting rule will ensure that share economy platform obligations include reporting data of all transactions to the ATO, identical to the way the taxable payments reporting system (TPRS) is being currently applied across several industries.
Transactions relating to ride-sourcing or a short-term accommodation services will be first in line for the reporting regime, with share economy platforms obligated to report these transactions from 1 July 2022.
Other share economy transactions will come under the new reporting regime from 1 July 2023.
The ATO will determine the frequency of reporting but have advised that it will start requiring reporting every two years.
The draft legislation issued by the Treasury on Tuesday notes that all electronic platforms that allow entities to make their services available to the end consumer via the platform will be included in the new regime. This covers platforms such as a website, internet portal, app, gateway, store or marketplace.
The obligation will mainly not be implemented if the transaction applies only to the supply of goods, where the ownership of goods has changed permanently, where title to real property is transferred, or the supply is a financial supply.
The rule arises since the Black Economy Taskforce became aware that without a reporting regime set in place, it would be tough for the ATO to gain information on compliance of sharing economy members if targeted audits were not implemented.
The ATO also claimed that a reporting system would send a clear indication to sharing economy participants that in the majority of cases, payments would be taxable.
Some believe that the new reporting regime will send a strong message to gig economy participants as there will be nowhere to hide. The days of not reporting the income are over if it was intentional or not for the participants. This is an important growing part of the economy and the risk to revenue becomes too large to overlook.
Once the reporting regime takes hold, the participants can no longer conceal the earnings which will lead to a level playing field with other sources of income such as wages.
If you need to discuss any of the above information with your accountant at Paris Financial, please contact our office.
