The ATO has signalled a compliance focus on the tax affairs of those who work in the ‘sharing economy’.
With tens of thousands of Australians now offering services through organisations like Uber, Airbnb, Airtasker and others, it’s never been more important to understand how the tax laws apply to these new ways of working. Recent research by H&R Block has shown that around 50% of Australians don’t understand that sharing economy work is taxable, so to help fill the knowledge gap, we’ve prepared our top ten tax tips that all sharing economy workers must know.
1. INCOME MUST BE DECLARED ON YOUR TAX RETURN
Income you receive from working in the sharing economy is taxable and must be declared on your tax return.
2. CLAIM DEDUCTIONS FOR ANY WORK RELATED EXPENSES
You can claim deductions for any expenses you incur as part of your work in the sharing economy, for example:
- If you are an Uber driver, most of your expenses are likely to focus on the costs of purchasing and running your vehicle. Remember to keep a log book of your journeys over a 12 week period so you can work out the business/personal split and keep a log of all journeys, including travel to and from pick-ups. Keep receipts too, so you can substantiate costs like fuel, servicing, car cleaning, etc.
- If you rent out a room through Airbnb, you can claim an appropriate proportion of any property related expenses such as rates, cleaning, heating and lighting, water, and cable TV subscriptions (if your guests have access to a TV connected to a cable service).
- If you’re an Airtasker worker, you can claim the cost of any tools or equipment you use in your work, as well as the costs of travelling to and between jobs.
3. FEES OR COMMISSIONS COULD BE TAX DEDUCTIBLE
Most sharing economy services take a fee or a commission out of the price you charge your customer for the service. That fee or commission is tax deductible.
4. AS A SMALL BUSINESS YOU HAVE ACCESS TO TAX CONCESSIONS
Typically, you aren’t employed by the sharing economy provider. For tax purposes, you are regarded as self-employed. That means you have access to all the tax concessions available to small businesses, including the $20,000 instant asset write-off for capital assets. That means you can immediately deduct the cost of any plant, tools or equipment you use in your business, including items such as computers and even motor vehicles (very handy for Uber drivers buying second hand cars)
5. CLAIM HOME OFFICE EXPENSES
If you run the admin side of your business from home, don’t forget to claim the appropriate proportion of home-office expenses, such as internet fees, landline or mobile phone bills, costs of office furniture, etc.
6. ONLY CLAIM THE BUSINESS-RELATED ELEMENTS
Where expenses relate to a mixture of business use and private/domestic use, make sure you only claim the business related element.
7. CAPITAL GAINS TAX EXEMPTIONS FOR AIRBNBERS
If you rent out part of your home through Airbnb, you might lose part of the Capital Gains Tax exemption which typically applies to your main residence. That means you could have a Capital Gains Tax bill if you sell your house.
8. UBER DRIVERS REGISTER FOR GST AND CLAIM GST CREDITS
If you’re an Uber driver, you must register for GST with the ATO and charge GST on all your fares, from the first dollar. You can also claim GST credits on your work-related purchases. You will need to submit a BAS form every quarter.
9. AIRBNB OR AIRTASKER REGISTER FOR GST IF TURNOVER EXCEEDS $75,000
If you’re on Airbnb or AIrtasker, you only need to register for GST if your turnover from your shared economy business (combined with any other business you run) exceeds $75,000.
10. MAKE SURE YOU DISCLOSE YOUR INCOME
The ATO has been in contact with all sharing economy service providers and knows who operates through those services. If you fail to disclose income from your sharing economy work, the ATO will know.
If you have any questions or need some advice, please contact us on:
- Phone: 08 8186 8444
- Email: firstname.lastname@example.org