Participants Of Sharing Economy Warned About Undeclared Income

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The sharing economy connects buyers (users) and sellers (providers) through a facilitator who usually operates an app or a website.

Some popular examples include Airbnb, Stayz, Uber, Deliveroo, and Airtasker.

It is often overlooked by providers of these services that money earned from using them is taxable income. Different rules apply, depending on what type of sharing economy activities are undertaken by an individual.

Tax responsibilities will vary depending on the services taxpayers engage with.

Those who rent out part or all of their home are reminded to:

  • declare what they earn in their tax return;
  • apportion related expenses as appropriate before claiming deductions and
  • understand it may affect their capital gains tax if they sell their home in the future.

Individuals who participate in ride-sourcing activities need an ABN, to register for GST from the day they start, to pay GST on the full amount of every fare and to keep records of income and expenses for both GST and income tax purposes. GST credits associated with your ride-sourcing enterprise are deductible.

Those providing other goods and services through the sharing economy must remember to declare what they earn and apportion related expenses. Participants of the sharing economy are not exempt from their tax obligations, and any undeclared income runs the risk of flagging their activity to the ATO.

While there are several compliance issues to consider, there are also many deductions users and providers of the sharing economy can claim but rarely do.

According to the ATO, to be eligible to claim a deduction:

  • Appropriate records must be kept
  • You must not have been reimbursed for the money spent
  • Cost must relate to the job/service and not a private expense
  • Accurately calculate how much of the total expense is business related and only claim from this portion.

If you have not declared your income obtained through the sharing economy, you need to contact your tax agent or speak with the Australian Taxation Office as soon as possible.

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