Australia’s cost-of-living crisis continues to pile pressure on households, and it has seen tens of thousands of Aussies turn to the sharing economy to boost their income. But 50 per cent of workers earning money through a side hustle on platforms such as Airbnb, Uber or Airtasker aren’t even aware they have to pay tax.
It’s never been more important to understand how the tax laws apply to these relatively new ways of working.
So, to help fill in the knowledge gap, here are nine tax tips that all sharing-economy workers need to know.
1. Income earned in the sharing economy must be declared on your tax return
You’ll need to pay tax on the income you have earned over the financial year so it’s vital that it’s accurately detailed on your tax return.
2. You can claim deductions for expenses
Any expenses incurred as part of your work in the sharing economy are eligible for a tax deduction.
For example, 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 log book 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, car cleaning, etc.
Or, if you rent out a room through Airbnb, you can claim an appropriate proportion of any property-related expenses such as rates, cleaning, heating and lighting, water, and cable TV subscriptions (if your guests have access to a TV connected to a cable service).
Likewise, if you’re an Airtasker worker, you can claim the cost of any tools or equipment you use in your work, as well as the costs of travelling to and between jobs.
3. Fees or commissions are tax-deductible
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.
4. For tax purposes you will be treated as self-employed
Typically, you aren’t employed by the sharing-economy provider, but are considered 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 (available until June, 30 2024).
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That means you can immediately deduct the cost of any plant, tool or equipment you use in your business, provided the cost is less than $20,000, including items such as computers and even motor vehicles (which is handy for Uber drivers buying second-hand cars).
5. You might be eligible to claim home office expenses
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, costs of office furniture, etc.
Alternatively, if you don’t want to keep invoices or work out the split between personal and business use, simply claim the Australian Taxation Office (ATO)’s 67-cents-per-hour fixed rate for every hour that you work from home (simply keep a diary of your working hours and one bill for each item you are claiming for).
6. You can only claim for business-related expenses
Where expenses relate to a mixture of business use and private/domestic use, make sure you only claim the business-related element.
7. You may lose your capital gains tax (CGT) exemption
If you rent out part of your home through Airbnb, you might lose part of the CGT exemption, which typically applies to your main residence. That means you could have a CGT bill if you sell your house.
8. You may need to register for goods and services tax (GST)
If you’re an Uber driver, you MUST register for GST with the ATO and charge GST on all your fares, from the first dollar. You can also claim GST credits on your work-related purchases. You will need to submit a business activity statement (BAS) form every quarter.
But, if you’re on Airtasker, for example, you only need to register for GST if your annual turnover from your shared economy business (combined with any other business you run) exceeds $75,000.
And, for Airbnb, you don’t need to register for GST or account for GST on the rent you charge because this income is typically regarded as residential rent.
9. The ATO is watching
The ATO has been in contact with all sharing-economy service providers and knows who operates through those services. If you fail to disclose income from your sharing-economy work, the ATO will know.
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