The sharing community has been around and active for over a decade now, but recently announced tax laws indicate that the government and the ATO are finally starting to catch up.
Up until the new laws were announced Operators of different ‘sharing’ platforms like Airbnb ‘hosts’ and Uber drivers have discovered a relatively quick and unregulated source of income. However, the new laws will now see some Operators being taxed on the income they generate from these platforms and other operators required to pay GST.
1. GST-ing the Share Economy
Traditionally, businesses are only required to register for GST if there earning activity is $75,000 per annum or more. However, so far the sharing economy has been a grey-area, with many confused or happily ignorant as to whether they have any tax-obligations. The new tax laws now mean that providers who meet the $75000 turnover threshold must register for GST if they haven’t already done so.
2. Uber drivers must now register for GST
Bringing Uber driver’s tax obligations in line with the taxi industry, Uber drivers must now register for GST regardless of their annual turnover. This is because the ATO now considers catching an Uber or using other ‘ride-sourcing’ platforms as ‘taxi travel’ under the new GST laws.
3. Hosts may now have to declare income derived from Airbnb
People who have rented out their properties privately or through real estate agents would be aware that they must include this money as ‘assessable income’ in their tax return. Well the ATO has declared that income from renting out your house/apartment partly or fully on Airbnb must now be included in your assessable income. This may also have capital gains tax implications for providers who wish to later sell their rented property. The ATO has declared that property owners who have used any part of their home to produce income may not be eligible for the main residence exemption under CGT laws. See below for more details.
4. Keep those books up to date
Whether you’re thinking of airbnb’ing your property out for some quick cash or you’re a seasoned-pro, the advice is clear:keep a record for the ATO. Due to the new tax laws, providers in the sharing economy should keep records such as income, deductions and apportionment for private use. As a rule of thumb, maintain the records for up to five years and be prepared if the ATO decides to audit you.
5. What should you do about it?
If you’re running a ‘sharing-startup’ – update your Terms Of Use to reflect the new tax laws and to provide adequate disclaimers about the new tax implications.
You can create a Terms of Use through LawPath if you don’t already have one.
If you’re an Airbnb host, check out the ATO website to fully understand any new tax obligations you may be under.
If you’re an Uber driver, you have until 1 August 2015 to obtain an ABN and register for GST. You can obtain an ABN through Lawpath and become GST-ready.
