If you are making some extra cash on the side with Uber, Airbnb or any other sharing economy platforms, the ATO will be going through your tax return with a fine tooth comb. Dana McCauly from news.com.au goes into detail in her recent article “Tax Office cracks down on sharing economy” .
After Uber begrudgingly agreed to its GST obligation the ATO warned its 20,000 to declare their incomes or be audited and penalised. Now the ATO has its eyes set on Airbnb with plans to audit some 75,000 hosts currently listed on the home sharing site. Research by the Deloitte Access Economics states that 53 per cent of Australian consumers “participated in some form of collaborative economy” last year and share economy is now shaping up to be a major player in Australia’s economy.
CPA Australia Head of Policy Paul Drum warns that hiding income from the tax man is not only illegal but foolish in the digital age. The ATO now has the ability to analyse transaction data at almost the click of a button and can crunch land tax receipts and ask “how can this tax payer afford that property?” Although some people believe the ATO can only delve seven years back, if you have been hiding out, which means you have been committing tax fraud and evasion, there is no limit to how far back the ATO will make you pay.
One of the biggest myths about share economy income is that you don’t have to declare sporadic or one-off transactions. Everything you earn from the initial dollar needs to be accounted for. For Uber drivers GST must be paid on every dollar but Airbnb hosts are exempt. Many Airbnb hosts now run their business through their accountant which takes care of keeping track of earnings and expenses.
Etax.com.au general manager Simone Gielis says sharing economy participants should know the following rules:
Whether for an extra bit of cash on the side or as your primary income source you must declare any income made through sharing economy platforms such as Uber and Airbnb. Keep track of your income and expenses and report honestly. Those found to be under-reporting will end up owing back taxes and be dealt with fines, penalties and interest charges.
Although your income is boosted from your Uber driving or rental you need to be aware that your tax payable rises with it. A percentage of your sharing economy income should be set aside otherwise you may get a nasty shock when it comes to paying your tax.
Just like you would with your business or job, keep a record of any expenses you incurred and receipts/invoices of these transactions and you may be able to claim back a portion (or all) at tax time.
If you are renting out a room or apartment, you can claim expenses and depreciation for the percentage of your house that was rented, for the duration someone was paying. You can also claim internet, phone bills, utility, council rates and depreciation on furniture. The most important thing to claim is interest on your mortgage. Ridesharing drivers can claim work-related expenses including insurance and registration costs, car maintenance, repairs and cleaning costs.
If you are unsure of how the sharing economy impacts your individual tax obligations you can enlist the services of a professional tax agent. To avoid being in over your head, or to minimise the additional stress this may be causing you, contact us today.