Taxes and the Sharing Economy in Australia

The sharing economy is growing in leaps and bounds and Australia is leading the pack in the growth and adoption of this versatile peer-to-peer economy. The country is seeing something of a hyper-uberization with the sharing economy cutting ever deeper into the conventional economy in key sectors.

Australia is a fast growth market not just for the ride-sharing service Uber but also for the home-sharing service AirBnB. The country is also the home to one of the leading global outsourcing platforms, AirTasker. Put together, the sharing economy in Australia now accounts for $15 billion in economic value. The Australian sharing economy is expected to hit $50 billion within the next five years.

Some 18.5% of Aussies over the age of 18 now have an AirBnB account while the country has more than 54,000 Uber drivers. Some 2.4 million Aussie riders use the ride hailing app. AirBnB has seen the most impressive growth in the peer-to-peer business industry in the country. There are more than 100,000 Australian properties listed in the home-sharing platform and Sydney, the country’s commercial capital is one of the top ten AirBnB cities globally. Similar growth patterns are seen in the country’s top task outsourcing platform, AirTasker. Australia’s top skills-based marketplace now has more than 1.7 million users with the highest grossing “tasker” earning close to $200,000 annually.

All this is a pointer that the sharing economy is here to stay and it is earning many participants very good income. But what about the taxes on the earnings in the sharing economy?

A recent survey has shown that 50% of Australians aren’t aware that they are supposed to pay taxes on their earnings from the sharing economy services such as Uber, Airtasker and AirBnB. At the end of the day, whether you are familiar with the implications or not, the sharing economy is going to have an impact on your taxes.

An Assessable Income

There has been a back and forth between the peer-to-peer platforms such as Uber and the ATO over the mode of taxation. At the very least, the ATO now requires Uber drivers to register for a GST (goods and services tax) if they earn an income of the more than $75,000 annually. But at the most fundamental level, what the tax authorities want to establish in a shared economy is that the participant has an assessable income.

It is this assessable income that the ATO wants to tax even if the activity is a not a business in the classical sense. If you are earning an assessable income from Uber, AirBnB or Airtasker, then you will need to keep proper records for the income that you are generating from the activity as well as the expenses incurred for participating in this economy.

Declaration of Your AirBnB and Other Home-Sharing Incomes

If you are renting a part of your home or your entire home through a home-sharing app such as AirBnB or Stayz, you need to have complete records of all the income that you have earned and declare this in your tax returns. You must also keep records of all the expenses that you have incurred during the rentals which you can then claim as deductions.

The income you receive from renting out your property in a sharing economy is an assessable income so it has to be declared in your tax returns. After the declarations, you can lay claim for deductions for associated expenses. If you decide to sell a property that you rent out on a home-sharing platform, you will also be liable for a capital gains tax, even if the property is your main residential address.

There are various expenses for which you can claim tax deductions if you are renting out your property with a home-sharing app or website. These must be directly related to the activity. They include the following:-

  • Electricity and gas
  • The cleaning and maintenance costs
  • Commission or fees charged by the facilitator or administrator. For example, if you are renting out via AirBnB, these will be the AirBnB fees.
  • Property insurance coverage
  • The council rates
  • Interest on property

Declaration for Uber and other Ride-Sharing Apps

The income earned from driving for Uber as well as other ride-sharing apps such as GoCatch and Shebah is also assessable and must be declared in your tax returns. Along with the declaration, you can also make claims on the expenses associated with being an Uber driver.

If you are an Uber driver, you are treated as a self-employed person by the ATO. You will therefore be eligible for all the tax concessions that are offered to small businesses such as a $20,000 instant asset write-off that is applicable on capital assets. This will be a huge relief for you if you are purchasing second hand cars for your Uber business.

Also, of note, is that you have to pay a GST (goods and services tax) if you are an Uber driver. Ensure that you register for a GST with the Australian Taxation Office and then begin charging this on all your fares.

If you will be incurring any work-related expenses in the course of running your Uber business, you can also make claims for GST credits. In case you are running your Uber business along with other small businesses, registering for a GST is going to have a spillover effect. If those businesses are grossing more than $75,000 annually, then you may need to account for the GST for these as well.

There are various tax deductions that you can also claim on expenses incurred if you are a participant in the ride-share economy. These expenses include the following:-

  • Parking fees
  • Phone bills
  • Costs associated with “on-boarding” yourself into the ride-share economy. To become an Uber driver, you have to go through an application and approvals process that will involve certain costs.
  • Costs of maintaining your Uber car including cleaning, servicing and repairs.
  • Tolls
  • Bank fees
  • Commissions and various other service fees that you pay to Uber.
  • Safety gear used in the Uber car

Declaration of your Airtasker Income

Airtasker is the leading peer-to-peer outsourcing platform in Australia. Some of the best grossing taskers on the platform make hundreds of thousands of dollars annually. This is an assessable income that should be declared in your tax returns.

If you look for work via Airtasker, ensure that you have proper records of all the tasks that you have completed on the platform just in case the Australian Taxation Office comes knocking. As a “tasker”, you can also file claims for deductions on expenses incurred when generating your Airtasker income.

You can claim Airtasker income tax deductions on the following expenses:-

  • The fees and commissions that you pay to Airtasker
  • Travel costs incurred in the process of commuting to your Airtasker tasks. These include fuel costs, parking fees, public transport costs, flight costs etc.
  • Phone bills
  • Bank fees
  • Insurance costs associated with your Airtasker tasks.
  • Costs associated with running a home office if you are working from home.
  • Cost of equipment and work-related gear including protective clothing.

Hire a Professional Accountant

Given the scale of the sharing economy and the diversity of gigs that you can partake of, keeping track of all your financial inflows and expenses can be a grueling task. The best way to streamline your finances and have your taxes in order is by hiring a professional accounting firm Melbourne has that will help you keep tabs on your money. You can also use a chartered accountant Melbourne professional as your tax agent to lodge your taxes over an extended period of time while giving you a complete peace of mind.

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