Participants in the ‘sharing economy’ – for instance, those earning money from AirBnB, Uber and AirTasker – could find themselves in hot water with the Australian Tax Office (ATO) as it steps up its monitoring on compliance, warns Helena Yuan, tax manager at HLB Mann Judd.
“The sharing economy has been booming and for many is seen as a good way to get a little more cash and perhaps have some fun. However people are often unaware that sharing their private home or car with strangers or doing the lawn for people in the neighbourhood and receiving money in return, could attract the ATO’s attention.
“The Australian Tax Office (ATO) has recently highlighted its ongoing focus on the tax compliance of those participating in the sharing economy, with the release of a package of updates.
“People who are involved in the sharing economy are unlikely to be very tax-savvy and may not fully understand that as far as the ATO is concerned, they earning an income from these activities and that this is liable for tax.
“In its latest update, the ATO has stated that anyone who provides services for a fee through the sharing economy must keep a record of all income earned, and declare it in their tax return.
“They also need to keep records of any expenses claimed, and maintain log-books or rental records if they receive income through offering their services on AirBnB or Uber, for instance.
“We have seen the ATO stepping up its data matching activities using information from third parties such as banks. This means declaring income and expenses accurately will be a major focal point for this year.”
Ms Yuan warned there may be other, longer-term, obligations to be considered.
“For example, the tax treatment for all short term stay in a residential property is the same as long term residential rental. So someone renting out the spare room in their family home on AirBnB may lose their CGT main residence exemption if they are also living in it at the same time.
“Similarly, anyone offering services through AirTasker or similar may need to register for an ABN.
“It is worth taking the time to fully understand the implications of earning money through the sharing economy, and talking with an accountant about what the tax obligations will be, as there could be penalties or fines involved,” Ms Yuan said.
HLB Mann Judd Sydney is a firm of accountants and business and financial advisers, and part of the HLB Mann Judd Australasian Association.