TAX TIPS FOR THE COLLABORATIVE ECONOMY
It’s estimated that more that 45,000 people now earn income through the collaborative economy in NSW alone (Deloitte Access Economics) and more than half of all Aussie consumers have participated in the sharing economy in some way, as companies such as Uber, Airbnb and Airtasker become increasingly mainstream.
As such, those earning income from the sharing economy should prepare for close scrutiny from the ATO. For those without good tax planning this could mean an ATO tax debt in the thousands, even tens of thousands of dollars – to help avoid this, here are some things to consider.
Don’t hide your earnings
Track your income and be honest on your tax return. Those who under-report their income may end up owing back taxes and be hit with fines, penalties and interest charges.
Don’t spend it all
If you don’t set aside some of your earnings, it can be a nasty surprise at tax time. During your first year you should put aside at least 30, even 40 per cent of what you earn from the ‘sharing economy’ to be safe.
Keep track of your expenses
It’s imperative that you keep an accurate record of your expenses in order to claim them.
For example, those that earn through Airbnb can claim expenses and depreciation for the percentage of time their home/apartment that was rented, including things like Internet and phone costs, utility and council rates and deprecation of furniture. While ridesharing drivers can claim work-related expenses including insurance and registration costs, car maintenance and repairs and even car cleaning costs.
Know your obligations
It’s important to have an understanding of how the sharing economy impacts your individual tax obligations otherwise you could be in over your head.
For instance, if you rent your home and want to ‘re-rent’ a room on Airbnb, you may need written consent from your landlord or even a tenancy agreement. Be sure to know the rules in your state to avoid getting into serious trouble.
The same advice applies for ridesharing drivers. Uber drivers are now required to register for GST and submit that portion of their fares to the ATO. That’s in addition to the tax you need to pay on your income. In any case where you’re not sure, or where tax policies are still under debate, it’s best to play it safe.
MyTaxDebt has teams of tax specialists all over Australia and if you have tax debt problems, fill out an enquiry form or call 1300 333 433 for a free consultation on your situation.
It’s estimated that more that 45,000 people now earn income through the collaborative economy in NSW alone (Deloitte Access Economics) and more than half of all Aussie consumers have participated in the sharing economy in some way, as companies such as Uber, Airbnb and Airtasker become increasingly mainstream.
As such, those earning income from the sharing economy should prepare for close scrutiny from the ATO. For those without good tax planning this could mean an ATO tax debt in the thousands, even tens of thousands of dollars – to help avoid this, here are some things to consider.
Don’t hide your earnings
Track your income and be honest on your tax return. Those who under-report their income may end up owing back taxes and be hit with fines, penalties and interest charges.
Don’t spend it all
If you don’t set aside some of your earnings, it can be a nasty surprise at tax time. During your first year you should put aside at least 30, even 40 per cent of what you earn from the ‘sharing economy’ to be safe.
Keep track of your expenses
It’s imperative that you keep an accurate record of your expenses in order to claim them.
For example, those that earn through Airbnb can claim expenses and depreciation for the percentage of time their home/apartment that was rented, including things like Internet and phone costs, utility and council rates and deprecation of furniture. While ridesharing drivers can claim work-related expenses including insurance and registration costs, car maintenance and repairs and even car cleaning costs.
Know your obligations
It’s important to have an understanding of how the sharing economy impacts your individual tax obligations otherwise you could be in over your head.
For instance, if you rent your home and want to ‘re-rent’ a room on Airbnb, you may need written consent from your landlord or even a tenancy agreement. Be sure to know the rules in your state to avoid getting into serious trouble.
The same advice applies for ridesharing drivers. Uber drivers are now required to register for GST and submit that portion of their fares to the ATO. That’s in addition to the tax you need to pay on your income. In any case where you’re not sure, or where tax policies are still under debate, it’s best to play it safe.
MyTaxDebt has teams of tax specialists all over Australia and if you have tax debt problems, fill out an enquiry form or call 1300 333 433 for a free consultation on your situation.