Top Tips for Tax in the Sharing Economy

Participating in the sharing economy of the 21st century can be a fun, fulfilling and flexible way to earn a living.

With thousands of Australians now offering their services through organisations such as Airbnb and Uber, it’s a vital time to educate yourself about tax law and how these laws apply to these new ways of earning money in the sharing economy.

Since the sharing economy is growing, the Australian Tax Office (ATO) has been keeping an increasingly close eye on those earning income from these services. Thus, it’s essential to accurately record and disclose your income and expenses. If you do not do this correctly, you could be up for audit and made to pay the penalty for any mistakes or oversights.

By using a convenient online service such as Online Tax Returns, our tax specialists will assist in correctly lodging your return as quickly as possible. With our experience and knowledge of the Australian tax system, you’re in safe hands.

Your Home

If you rent out all or part of your residential home, unit or apartment through a website or app, you will need to keep records of all income earned. You then must declare it in your income tax return that year, and keep thorough records of all expenses you may be able to claim as deductions.

Common expenses you can claim include:

  • Fees or commission charged by the facilitator;
  • Council rates;
  • Interest on a loan for the property;
  • Electricity or gas;
  • Property insurance; and/or
  • Cleaning and maintenance costs.

These all depend on what proportion of the year the property was rented, the portion of the property rented, and whether you use the property (fully or in part) for personal use when not rented.

Most of all, you need to declare all payments you receive through renting out your residence, as they are assessable income. Keep in mind, when you eventually sell the residence you may also need to pay Capital Gains Tax (CGT), as renting out any part of it typically means you will lose a part of your CGT main residence exemption.

Your Ride

As an Uber or similar ride-share driver, you are viewed as self-employed, and your income earned from ride-sharing is assessable by the ATO. You will need to register for the Goods and Services Tax (GST) and charge GST on all your fares right from the first.

This may impact the GST status of any other business activities you’re involved in, so if you’re a small business owner with a turnover of less than $75,000 you may have to account for GST in relation to that business too. You are also required to submit a Business Activity Statement (BAS) form every quarter.

As a driver, common expenses you can claim include:

  • Commissions, licensing, or service fees paid to Uber/app;
  • Costs of becoming a share driver – such as medical and police checks, application fees;
  • Passenger costs such as water, mints, or fuel;
  • Tolls;
  • Parking;
  • Vehicle licensing or registration;
  • Mobile phone bills;
  • Safety equipment such as hi-vis vests;
  • Costs of cleaning, servicing, and repairing the vehicle;
  • Insurance;
  • Tax agent/accountants fee; and/or
  • Bank fees.

You can also claim deductions for business use of your car, using either of the following methods:

  1. Cents per Kilometer Method
    You can claim 66c per kilometer from 1 July 2016 if you travel less than 5000 business kilometers.
  2. Logbook Method
    Use this method to base your claim on the business use percentage of each actual car expense. This is determined by a logbook that you’re required to keep for a minimum of 12 weeks, updated every 5 years.

Your Choice

The easiest way to ensure you are doing all the right things while working within the sharing economy is to contact a reputable tax agent. Our team of tax specialists at Online Tax Return are committed to making organising and lodging your taxes easy and convenient.

We can assist you to lodge your quarterly BAS, and annual tax return. We can help you to maximise your tax return, and can even advance a portion of your return into your bank account on the same day.

Finally, no longer do you need to spend time in the waiting room of a tax agency to benefit from having a tax agent on your side – simply fill out our online form and one of our accountants will call you!

See, tax agents can take part in the sharing economy too!

Lodged my Tax Return online and was happy with my refund, nice and easy process.

Jack Kangwa

Easiest online return i have tried, no messy paperwork or appointments. Great experience!

Paul Ryan