What is the Sharing Economy?
The sharing economy connects buyers (users) and sellers (providers) through a facilitator who usually operates an app and/or website.
The sharing economy includes services such as ride sourcing – when you transport passengers for a fare (e.g. Uber), renting out a room, whole house or apartment as accommodation (e.g. AirBNB), renting out a car parking space (e.g. Parkhound), providing skilled services like building a website (e.g. Freelancer) or completing odd jobs or errands for money (e.g. Airtasker)
When you participate in the sharing economy, you need to consider if what you are paid needs to be included in your tax return. You also need to consider what other tax obligations you may have as part of providing goods or services in the sharing economy.
The ATO is continuing to increase their electronic data matching activities. Do not be caught with an unexpected tax bill because you have not confirmed your tax obligations. Contact us today.
If you are involved in the sharing economy, you need to consider:
- if you are carrying on an enterprise
- if you need an ABN
- if you need to register for GST and lodge activity statements
- if the price of the goods or services you provide includes GST
- if and when you need to provide tax invoices for your sales
- if you need to declare your income in your income tax return
- what GST credits and income tax deductions you can claim for your expenses related to earning your income
- how all your sharing economy activities added together impact your GST and income tax obligations.
If you carry on an enterprise of providing ride-sourcing services, under the GST law you need an ABN, you need to be registered for GST, and you need to account for GST on the full amount of every fare regardless of how much you earn. You can also claim the business proportion of your input tax credits. The GST registration threshold does not apply to ride-sourcing services. The ATO considers that you are running a small business as a sole trader, so you need to declare all the income earned from providing ride-sourcing services and you can claim the expenses related to providing the services.
If you are selling goods or performing a service as a spare-time activity or pastime you pursue for pleasure or recreation, then you may just be partaking in a hobby which does not have tax or reporting obligations.
There are different tax obligations depending on what goods or services you are providing. Please refer to the links below to find out more information about the tax obligations of each activity:
- Renting out all or part of my house
- Renting out a car parking space
- Providing goods and services
- Providing ride-sourcing services