ENTERPRISING Australians who hope to join millions of others making money from Uber, Airbnb, eBay, Gumtree and other sharing economy services this year are being urged to beware of the taxman.
The rapid rise of these online platforms has created a large group of people who are playing with fire and don’t realise their income must be declared, tax specialists say.
Unlike the black economy where cash transactions have been hidden from the Australian Taxation Office for decades, online payments leave a digital signature that is easily traced by the ATO’s data matching technology.
“The sharing economy and online selling have changed the way we do a lot of things, but it hasn’t changed your tax obligations,” ATO Assistant Commissioner Matthew Bambrick said.
“If you earn money from doing odd jobs, such as through tasking platforms, transporting passengers through things like ride-sourcing, or renting out a room or house, you need to declare it because it counts as assessable income,” he said.
Do you make a little something on the side? Declare it, tax specialists advise. Picture: AFP
“Amounts paid for renting our all or part of a house or unit through the sharing economy must be declared as rental income in the tax return.”
NDA Law managing director Andrea Michaels said many people earned money from the $500 million-plus sharing economy “on the side” and did not think about the tax consequences.
“The ATO is onto it and it’s very easy to track down now, so do the right thing,” she said.
Ms Michaels said a one-off room rental might be seen as a hobby, but regular Airbnb listings and rentals would be assessable income.
“People don’t realise that as soon as you start earning income on a property, the capital gains tax exemption that normally applies to your home gets affected.” This could create a CGT bill when the house is later sold.
Tax expert and Deakin University associate professor Adrian Raftery said selling stuff online could be seen as either a hobby that was tax exempt or a business that generated taxable income.
“There’s a fine line between selling your second-hand pair of shoes and selling 100 pairs of new shoes,” he said.
“Doing an odd sale here and there of your own second-hand stuff is more likely to be non-taxable.”
Aussies may not realise online payments leave a digital signature, making it easy for the ATO to monitor your income. Picture: Supplied
Dr Raftery said the ATO had previously accessed all the Australian accounts of eBay users with more than $20,000 of sales a year, and had the power to do similar investigations with other sharing economy businesses.
“It all operates on the cloud, so it’s hard to hide because you have a transaction trail,” he said.
“Don’t wait until the end of the financial year to realise you need to put some money away to pay tax. Try and put one-third into a separate account so there’s a pool of funds so you don’t get caught out.”
The ATO’s Mr Bambrick said each year the ATO received 650 million pieces of information from third parties such as banks and would investigate anything that “doesn’t look quite right”. It has used this data to identify and write to Uber and other ride-sourcing drivers to remind them of their obligations, he said.
Last year the ATO penalised an eBay seller tens of thousands of dollars after finding he did not declare sales of more than $1.5 million a year. It examined foreign transactions, real estate purchases, and data from eBay and Australian Customs.
Article published in the here in The Mercury on 14 January 2017.
Originally published as The taxman is coming for sneaky Aussies