THE Australian Taxation Office has signalled a compliance focus on the tax affairs of those who work in the sharing economy.
H&R Block Tasmanian manager Steve Hinton said with tens of thousands of Australians now offering services through organisations like Uber, Airbnb and others, it had never been more important to understand how the tax laws apply to these new ways of working.
“Recent research by H&R Block has shown that around 50 per cent of Australians don’t understand that sharing economy work is taxable,” he said.
To help fill the knowledge gap, listed below are some tax tips that all sharing economy workers should know.
Income you receive from working in the sharing economy is taxable and must be declared on your tax return.
You can claim deductions for any expenses you incur as part of your work in the sharing economy.
If you are an Uber driver, most of your expenses are likely to focus on the costs of purchasing and running your vehicle. Remember to keep a logbook of your journeys over a 12-week period so you can work out the business/personal split and keep a log of all journeys, including travel to and from pick-ups. Keep receipts too, so you can substantiate costs like fuel, servicing and car cleaning.
If you rent out a room through Airbnb, you can claim an appropriate proportion of any property related expenses such as rates, cleaning, heating, lighting and water.
Most sharing economy services take a fee or a commission out of the price you charge your customer for the service. That fee or commission is tax deductible.
Typically, you are not employed by the sharing economy provider, so for tax purposes you are regarded as self-employed. That means you have access to all the tax concessions available to small businesses, including the $20,000 instant asset write-off for capital assets. That means you can immediately deduct the cost of any plant, tools or equipment you use in your business, including items such as computers and even motor vehicles.
If you run the admin side of your business from home, don’t forget to claim the appropriate proportion of home-office expenses such as Internet fees, landline or mobile phone bills and costs of office furniture.
Where expenses relate to a mixture of business use and private/domestic use, make sure you only claim the business related element.
If you rent out part of your home through Airbnb, you might lose part of the Capital Gains Tax (CGT) exemption that typically applies to your main residence. That means you could have a CGT bill if you sell your house.
If you’re an Uber driver, you must register for GST and charge GST on all your fares from the first dollar. You can also claim GST credits on your work-related purchases and you will need to submit a BAS every quarter.
For more information, contact H&R Block by phoning 13 23 25 or visit hrblock.com.au.