Published on the 25/05/2015 | Written by Beverley Head
Crowdsourcing is in the firing line of the Australian Taxation Office which has people selling time in their cars or homes in its sights…
The Australian Taxation Office (ATO) last week released advice on the tax consequences of what it described as the “sharing economy”. With people using services such as Uber and Airbnb to liberate value in their homes or cars, and generate income, the ATO has warned that existing tax laws apply to online services just as much as they do to bricks and mortar based enterprises.
The ATO last week said that people who provide ride-sourcing services are providing ‘taxi travel’ under the GST law, requiring drivers to register for GST, regardless of their turnover. It has however allowed drivers some breathing space – and given them until 1st August 2015 to get their affairs in order.
According to the ATO deputy commissioner James O’Halloran: “Affected drivers must register for GST, charge GST on the full fare, lodge business activity statements and report the income in their tax returns.”
Responding to the advice, Dermot Gaffney, head of indirect tax at KPMG, said: “While for income tax purposes, the income generated from any sharing enterprise must be declared in the same way as for regular taxpayers, the situation is more complicated for GST. Consumer to Consumer (C2C) trade provides real challenges to the fundamentals of indirect tax – the fragmentation of the supplier base from a small number of multinational companies to a huge number of individuals will make accounting for and regulating the tax very difficult.
“As individuals we still tend to think of C2C transactions as selling our unwanted items on eBay but the rapid growth of new electronic marketplaces – the so called sharing economy – for an increasing range of goods and services that were traditionally the purview of the established business community represents a fundamental shift in the economy.”
He outlined that the challenge for the ATO and other government revenue raisers was that although the tax office might not want the administrative burden of having to pursue vast numbers of individuals for relatively small amounts, nor did it want to see its revenue base erode.
But individuals should not rely on the ATO not being bothered to police the issue. Gaffney said: “I would advise anyone starting a small business or participating in a marketplace platform to consider the tax implications and discuss with the platform provider as to who exactly is responsible for what taxes.”
