ATO scrutinises data on Airbnb hosts, Uber drivers
SHARE economy users will be heavily scrutinised by the Australian Taxation Office (ATO) this year, so must make sure they are compliant, experts say.
Thousands of Australians are moonlighting as Uber drivers, hosting Airbnb guests or performing odd jobs on Airtasker and the tax office believes many fail to meet their obligations, according to Mark Chapman, director of tax communications at H & R Block.
"The sharing economy is a big focus for area for the ATO this year because they believe there are so many people in that space who aren't complying with tax rules," Mr Chapman said. "Some simply aren't declaring their income … (some) aren't complying with their GST obligations, while others are overclaiming their deductions."
Most income earned from the share economy is considered 'business income', which must be declared on the individual's tax return. Airbnb income is regarded as 'rental income', but is still taxable.
Meanwhile, if the turnover from a business on the share economy is more than $75,000, the individual must register for GST and charge GST on services, provide tax invoices to customers and lodge quarterly Business Activity Statement (BAS) forms.
"Different sharing economy platforms are treated very differently for GST purposes," Mr Chapman said. "Uber drivers need to account for GST on every dollar they earn, Airtasker workers only need to worry about GST if their business income exceeds $75,000 and Airbnb hosts usually don't need to worry about GST at all because rent is exempt from the tax."
The ATO can get its hands on more data than ever before, including accessing it directly from the share economy platforms, so it is crucial to be compliant or risk penalties, but there are also advantages.
"Any expenses you incur in running your business are potentially tax deductible," Mr Chapman said.
Expenses could include fees or commissions paid to the share platform; transport costs of getting to and from jobs, including vehicle costs; costs of any materials used in your job; business related insurance and bank fees; meals, flights and accommodation for interstate jobs; and interest costs on loans used to purchase assets for a business, such as a car for an Uber driver or a property for Airbnb renting.
One big advantage small businesses should take advantage of now is the $20,000 instant asset write-off, which will no longer be available after the 30th of June, 2018.
"Small businesses can claim an immediate tax deduction for any capital items purchased for use in your business provided the cost of each asset is less than $20,000," Mr Chapman said. "That could include a car, computer equipment, office furniture or tools to use in your trade."
Airbnb has partnered with H & R Block to give its hosts discounted access to tax services. Hosts will pay 20 per cent less than others for standard income tax returns and have access to a summary of earnings before tax time, according to Airbnb head of public policy ANZ Brent Thomas.
"Airbnb hosts in Australia earn just over $5,000 a year. Hardly a fortune or a king's ransom but we know this helps people pay the mortgage or bills," Mr Thomas said. "With tax time fast approaching, Airbnb wants to help our hosts meet their tax obligations and ensure their pay their fair share."
Uber drivers are considered independent contractors so are responsible for their own tax, but a spokeswoman confirmed Uber also has an arrangement with H & R Block and provides drivers with information about their tax obligations.