Little wonder it’s become a favourite pastime in some suburbs – even if many apartment owners who don’t participate are sometimes less than thrilled with the late, loud party being held by the overnight residents of 5A.
But the relentlessly explosive growth of the “sharing economy” also means the government is trying to ensure owners are paying the appropriate tax on that income.
That ambition extends to other massive growth businesses allowing individuals to earn money in what is also known as the “gig” economy.
Dubious estimates
From the international phenomenon of Uber to the homegrown and extremely successful Airtasker, matching people with short-term or one-off tasks.
According to admittedly dubious estimates from the Board of Taxation, nearly 11 million Australians expected to earn extra money from sharing economy services in the second half of 2017.
It also suggested Australia’s sharing economy was worth about $15 billion exactly two years ago. The number of those involved and the money in play can only have grown substantially since.
And that means the government is on the lookout for its share, fair or otherwise. The consultation paper put out by Treasury on Wednesday puts it politely enough.
“This potential underpayment of tax undermines the benefits of the sharing economy to consumers and businesses and creates an unfair playing field for those doing the right thing,” it says.
A few years ago, the Australian Tax Office had a bitter dispute with Uber about whether its drivers needed to register for GST – as taxi drivers do. In the rest of the Australian sharing economy land, GST is only applicable if the provider of services earns more than $75,000 a year.
The tax man won that particular fight and the paper tactfully notes data collection in the ride-sourcing sector has “enabled the ATO to undertake preventative activities to help drivers understand and comply with their obligations”.
The GST registration rate has gone up from 54 per cent to 77 per cent as a result.
But the Treasury paper says a more comprehensive regime is needed in other areas. Its immediate target is setting up a reporting regime that captures all online platforms in the sharing economy in a standardised format.
It helps that what technology now permits in terms of informal and direct relationships between “buyers and sellers” also has the potential to make that money easier to trace via sophisticated data matching.
The Treasury paper suggests some “sellers” might incorrectly consider the income they earn is not taxable because it is “hobby” income or only occasional or short term. Or, ahem, the non-payment or underpayment of tax might just be deliberate.
“In a self-assessment tax system like ours, while education and guidance on tax obligations is important, the absence of a comprehensive reporting framework for workers poses risks of non-compliance,” it notes delicately.
‘Trying to be helpful’
The solution, as proposed by Treasury, would be to require operators of sharing economy platforms to collect and report key information such as details of the identity and income of their sellers based in Australia to the ATO. The ATO would then assess what tax would be payable on this income and could also share this information with other government agencies.
You can see where this is all heading, of course…
And, of course, the government is insisting its approach is really just about trying to be helpful to individual taxpayers by reducing their compliance burden. Somehow, I think few of my Airbnb neighbour landlords will quite see it that way.
The paper does acknowledge there may be compliance costs for the businesses and platforms forced to set up these reporting requirements no matter how small or new they are.
They are seeking views on whether there should be a “grace period” – and of what duration – for start-ups in the sharing economy. But it insists the transition from ad hoc to systematic reporting may provide platforms with a stronger case for streamlining data collection, allowing a reduction in costs for a larger number of sharing economy sellers. Again, don’t try and sell that line, either online or in the local pub.
But the paper points out an earlier government taskforce into the black economy didn’t recommend any income tax exemption for income from sharing economy activities up to a specified threshold. The ATO view is, broadly, that the activities of participants in the sharing economy will “give rise to assessable income”, it says.
You’ve been warned. The taxman cometh.
from Just News Viral http://bit.ly/2WdiuiH
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