Tax obligations arise from sharing economy

• • need to keep records of all income received and declared in income tax returns
  • need to keep records of all expenses to be claimed as deductions
  • may need to get an ABN and register for GST.

Examples of activities or services in the sharing economy include:

• the letting of residential property, eg a room in one’s home
• providing taxi travel services, ie “ride-sourcing”
• providing personal services, or providing odd jobs such as delivery or a furniture assembly
• renting out a car parking or storage space.

Sharing economy goods or services are typically facilitated by the operator of a website or app, eg Uber and Airbnb. These operators typically provide a platform where the provider of a service can connect with consumers and there is a cash payment for the services provided.

If you sell goods or performs services as a spare-time activity for pleasure or recreation they may be engaged in a hobby, in which case tax or reporting obligations would not apply.

Ride-sourcing services

Income tax

You must include all income earned in the income tax return, along with any expenses they can claim as deductions.

Goods and services tax

The ATO view is that ride-sourcing services are “taxi travel” under the GST law, so drivers are required to register for GST regardless of their turnover. This rule does not apply to:

• non-commercial carpooling arrangements where passengers contribute petrol money or other arrangements where there is no view to profit
• car sharing arrangements where multiple users have access to a car which they use to drive themselves from one location to another
• arrangements that use vehicles other than cars, e.g. motorised tricycles
• arrangements where a car is used only to transport passengers for a particular purpose (e.g. a wedding or a funeral procession) and which is not made available more generally to transport members of the public from one place to another.

Rent out part or all of a house and parking space

Income tax

You must declare all income earned in the income tax return, along with any expenses they can claim as deductions. Any deductions need to be apportioned according to rented floor space (including part-use of shared areas) and the number of days actually rented.

Goods and services tax

According to the ATO, renting out a room in a house is an input taxed supply of residential premises, which is not subject to GST.

Renting out a car parking space located in a residential building, by contrast, is a taxable supply that is subject to GST if it is made by a GST registered person or entity.

Capital gains tax

Generally speaking, a partial gain will be assessable based on the number of nights the property is rented and how much of the property is used for income-producing purposes.

If a property first became income-producing after 20 August 1996, a market valuation of the property is required for cost base purposes.

Providing goods or services

Income Tax

You must declare all income earned in the income tax return, along with any expenses they can claim as deductions.

Goods and services tax

You may need to register for and pay GST if turnover is or is expected to be $75,000 or more per year.

Source: CCH iKnow

If you are unsure of your tax or reporting obligations from the sharing economy, please contact our office. If you want to read the ATO’s position, please follow the link below.