Do you transport passengers in your car through Uber? Do you use a website or app to rent out rooms through Airbnb? Do you provide other services through the ‘sharing economy’?
If your answer to any of these questions is yes, the ATO has signalled its interest in your income tax and GST obligations.
The ATO considers that you should be registered for GST no matter how much you earn from providing your service. Once registered for GST, you will then need to charge GST to your passengers.
This is because the ATO considers that Uber drivers provide ‘taxi travel’. Under GST legislation, a taxpayer who provides services of ‘taxi travel’ must register for GST regardless of annual turnover.
‘Taxi travel’ is a defined term. There is a query as to whether Uber drivers’ private vehicles fall within the ordinary meaning of ‘taxi or limousine’ to qualify as providing services of ‘taxi travel’.
For Uber drivers, any payment made by passengers should be declared as part of your assessable income.
You may be able to claim input tax credits and deductions on some of your expenses.
Airbnb accommodation providers
If you rent out a room in your home through Airbnb or similar providers, you will need to consider whether you are carrying on an enterprise, and if so, whether you are under the $75,000 per annum GST registration threshold. However, the ATO position is that you should declare all of the rental income you earn in your income tax return.
You may also be able to claim a deduction for expenses relating to your house or apartment including a proportion of the interest on your mortgage.
If you sell your home in the future you may have to pay capital gains tax on part of the gain from the sale because you have used your home to derive income.
What does this mean for you?
The ATO has indicated that it will allow taxpayers until 1 August 2015 to review their tax positions.
After that deadline, we expect that ATO audit activity will increase in the ‘sharing economy space’.
If you would like further information about potential income tax or GST liabilities arising out of your activities in the sharing economy, please contact a member of our team.