Sharing is caring, right? However, when it comes to the sharing economy, the ATO is feeling neglected and wants its fair share. Here’s what you need to know if you rent out your property on Airbnb.
If you need any more convincing that the Australian Tax Office (ATO) will be cracking down on undeclared income from sharing economy platforms such as Airbnb this year, check out the name of the consultation paper that Treasury released this week:
‘Tackling the black economy: A sharing economy reporting regime.’
Now, the number of Australians involved with “the black economy” is quite hard to quantify, but Treasury has given it a crack.
They believe almost 11 million Australians earned extra money from sharing economy services – including Airbnb, Uber, Uber Eats, Airtasker, Parkhound and many other platforms – from July to December 2017.
And while Airbnb doesn’t release any official data, independent monitoring website Inside Airbnb says listings in Australia grew from 43,610 in 2016 to 89,863 in December 2017.
No wonder the tax man feels like he’s missing out.
Consultation paper findings
It’s no secret the ATO is well aware that a lot of people haven’t been declaring income from sharing platforms in recent years. In 2016 they released this video, and more recently built this information webpage.
However this consultation paper is the clearest indication yet that a tax crackdown is nigh.
“During its consultations, the Taskforce heard that as the sharing economy grows there is an increasing risk that sellers may not be paying the right amount of tax,” the report states.
“The ATO has already begun to work with businesses on a reporting regime, obtaining information from some ride-sourcing providers and accommodation providers under its formal information gathering powers.”
In a nutshell: the ATO will be granted access to your Airbnb and Uber income data if they require it.
What to do?
Well, if you’re not already, then it’s time to start keeping accurate records of the income you’re earning in the sharing economy space. That includes platforms such as Uber, Airtasker and many other players.
Declaring the income is straightforward and just like any other form of income you earn: basically keep statements showing income from your guests, and don’t forget to keep receipts of any expenses you want to claim deductions for. That will make it straight-forward come tax time.
It might be worth checking out this information page from the ATO for further tips.
Finally, keep in mind that if the ATO is cracking down in this space they might also look more closely into some of your past tax returns. In which case, here’s what you need to know about correcting a past income tax return if declaring income in the sharing economy space slipped your mind in the past.
It may increase the tax you owe, but the ATO generally treats it as a voluntary disclosure. You’ll still have to pay any outstanding tax, but you’re likely to receive concessional treatment for any penalties and interest charges that apply.
If this article interested you and you would like to speak to Pat Casey on the phone, select a time to speak Pat – Financial Planner Sydney.
At Assure Wealth we specialise in helping busy, successful families structure their finances to achieve greater wealth and financial peace of mind.
Author: Pat Casey – Managing Director & Financial Planner Sydney – Assure Wealth
Download the Assure Wealth Corporate Brochure
Disclaimer:
The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Alliance Wealth Pty Ltd Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Alliance Wealth nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.
