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Tax Implications of resource sharing services e.g. Uber & Airbnb

The sharing economy is booming thanks to the far-reaching capability of the internet and the growing use of smart phones.  While it might have started as a good way to get a little more cash and fun, people often are unaware that sharing their private home or car with strangers or doing the lawn for an 80-year-old would attract the ATO’s attention.

Types of resource sharing services

Common ways of participating in the sharing economy include ride-sharing services e.g. Uber and short-term stay offerings e.g. Airbnb.  However, there are many more offerings that fall under this umbrella that you may not be aware of.

Other Examples can include and not limited to:

  • Offering regular home cooked meals through apps such as Eatro
  • Regular freelancing work through Upwork
  • Rent out private carparks through Parkhound

If this is you, be aware of your tax obligations.  It is important to distinguish if your activities are being run as an enterprise or just as a hobby/pastime.

Am I running a business?

This is all dependent on the frequency of your activities, the work that is being done and if your plan to make a profit.

Ride-Sourcing Services

As far as the ATO is concerned, anyone who is offering a ride-sourcing as a way to a) supplement their income or b) as the sole source of their income is deemed to be offering a taxi service. This means the GST threshold does not apply and GST must be accounted for from your very first fare that you charge.

The only exception is when you’re offering this service as a ‘once a while’ basis. In this case, you may be eligible to consider the service as a hobby.

Be aware that if you are offering multiple sourcing activities, you may have more requirements when reporting GST.

Short-Term Stay

The ATO treats all short-term stays in a residential property is the same as long-term residential rental, regardless of whether the room or property being rented is the main residence or a residential investment property.

Therefore, all income must be declared in your income tax return and all expenses incurred directly relating to earning the rental income can also be claimed as deductions.

There are no GST obligations associated with residential rental. However, be aware that if are renting out a part of their main residence, you may lose your CGT main residence exemption, even if you are living in it at the same time.

Freelancing

Where personal services are being provided, it is critical to consider the concept of business versus hobby.  Depending on the nature, frequency and your intentions, freelance work through a facilitator such as Upwork may be considered as running an enterprise.

The table below does not cover all types of goods and services available in the current sharing economy, but the tax obligations outlined should be relevant to other similar activities in the sharing economy.

 

Service GST Requirements Record-Keeping Requirements
Ride Sourcingeg Uber MUST be registered for ABN and GST from the first dollar earned.Business activity statements must be lodged. Records necessary may include:

  • log books of kms travelled
  • electronic records from the facilitator
  • records of deductible expenses.
Short-term stayseg Airbnb No ABN registration requirements or GST obligations on residential rental income. Must keep rental records showing the proportion of which the property is rented so that expenses claimed can be accurately supported and for future CGT calculations.
Freelance Worke.g Upwork Must be registered for ABN where the person is deemed to be running an enterprise.  If the annual projected turnover is less than $75K, no GST registration is required.When calculating the annual turnover, you should consider all sharing economy activities and other business activities you participate in, except for residential rental income. Must keep a copy of all receipts and invoices relating to the business activities.
Renting out a car spacee.g Parkhound ABN registration is required where you are deemed to be running an enterprise.  If the annual projected turnover is more than $75K, GST registration is required.When calculating the annual turnover, you should consider all sharing economy activities and other business activities you participate in, except for residential rental income. Must keep rental records, including

  • records showing the number of days in a year a car space is rented
  • area of the car space to total area of the property for future CGT calculations.

Whether you intend to offer sourcing services as a means to supplement your income or just as a hobby, you need to be aware of the tax implications that this might have on you. Make an appointment with us to see if you are meeting your tax obligations.