| In Australia, any income earned by a job may be considered taxable income. Those who receive their income via the sharing economy are no exception to the rule.
In fact, there can be further complications that result from incorrect understandings of how the income tax and goods & services tax may apply to those individuals. ‘ The sharing economy is a socio-economic system built around sharing resources, often through a digital platform like a website or an app that others can purchase the right to use for a fee. Popular sharing economy services and activities that could be subject to income tax include · Being a Driver for popular ride-sharing/ride-sourcing services and obtaining fares for those services · Renting out a room, whole house or a unit on a short-term basis · Sharing assets (such as cars, parking spaces, storage space or personal belongings) through platforms such as Camplify, Car Next Door, Spacer, Toolmates or Quipmo. · Creative or professional services provided by individuals through online platforms to fill a need of others (also known as the gig economy) Here are some things you need to remember about the income and goods & services tax for these popular sharing economy services. Ride-Sourcing/Ride-Sharing · An ABN · GST is to be registered from the day you start, regardless of how much you earn. · GST is to be paid on the total fare. · Business activity statements (BAS) to be lodged monthly or quarterly. · To know how to issue a tax invoice (any fares over 82.50 must be provided if asked). Income tax needs to: · Include the income you earn in your income tax return · Only claim deductions related to transporting passengers for a fare, including apportioning expenses limited to the time you are providing a ride-sourcing service · Keep records of all your expenses and income. Renting out all or part of your home · You need to keep records of all income earned and declare it in your income tax return · Need to keep records of expenses you can claim as deductions · Do not need to pay GST on amount of residential rent you earn. Sharing Assets (Excluding Accommodation) · You need to declare all income you receive in your income tax return · You are entitled to claim certain expenses as income tax deductions · You need to keep records of the income you earn and of the expenses you can claim as deductions Providing Services · Delivering goods · Performing tasks and activities · Providing professional services |
Those who fail to declare their income from their sharing economy side hustle may incur penalties in the form of interest on their tax bills or potential criminal charges.
You must ensure your tax return is correctly lodged and all income is declared if you are a gig economy worker of any kind. If you have any questions in relation to this article, please contact one of our accountants at the Victoria Point office.