Earning sharing economy income?
A quick guide to the tax, GST and CGT considerations.
According to estimates by the Sharing Hub, 1 in 10 Australians are boosting their income by supplying services through the sharing economy. Comparison site Finder released the results of a survey showing that it is possible to make up to almost $20,000 year by offering services in your spare time or from under-used physical assets. It is expected that these figures will increase as share economy platforms become more mainstream and households look for creative ways to deal with rising living costs. Some of these activities include:
- renting out a room or a whole house or unit for a short-term period through platforms such as Airbnb and Stayz
- providing ‘ride-sourcing’ services for a fare through services such as such as Uber, SheSafe and GoCatch
- providing personal services or odd jobs like deliveries and furniture assembly through Airtasker, Mad Paws, Zoom2u or Deliveroo
- renting out a car parking spaces via Parkhound or Spacer
- sharing caravans, motorhomes and other vehicles through platforms such as Camplify or Car Next Door
Are you thinking about earning additional income through the sharing economy? If so, it’s important to remember that income from the sharing economy is taxable income just like any other form of income. The Australian Taxation Office (ATO) has this type of income in their sights and is using enhanced data matching technology to catch out those who attempt to hide their extra earnings.
Tax and the sharing economy
Income Tax is payable on the payments you receive through the sharing economy that are assessable income. Remember you can claim tax deductions relating to the income you earn, including the fees or commission charged by the sharing economy facilitator.
Assessable income can include:
- income earned from performing services for a fee, such as ride sourcing, delivery services or other services arranged through a sharing economy platform
- earning short-term or long-term rent from a property or part of a property that you own or lease, such as your home, a rental property or a parking space
- income from sharing other forms of property, such as a motor vehicle or caravan
- income received from carrying on a business arranged or facilitated through a sharing economy platform.
You should keep records of income and expenses regardless of how much you earn.
You also need to consider if you are carrying on an enterprise. If so, you’ll need an Australian Business Number (ABN) and may need to register for Goods and Services Tax (GST) and lodge activity statements.
GST and the sharing economy
If your turnover is below (or is projected to be below) the GST threshold of $75,000 per year, you are not required to register for GST. However, you can apply for an ABN, for example if you’re going to invoice businesses for work you do that is outside of the sharing economy.
If you have a ride-sourcing enterprise, special rules apply and you must have an ABN and register for GST regardless of your turnover.
If your turnover is (or is projected to be) $75,000 or more per year, you need to have an ABN and register for GST.
If you’re already registered for GST for any reason, and you earn income providing goods or services through the sharing economy, you need to account for GST on those earnings through your existing ABN and GST registration. This includes if it’s from:
- another enterprise
- other sharing economy sites
For example, if you are registered for GST because you have a ride-sourcing enterprise, you also have to account for GST on goods or services you provide through any other enterprises you carry on, such as renting out a car parking space.
Capital Gains Tax considerations
Just like running a business from home, once income is earned from a primary place of residence there are Capital Gains Tax (CGT) implications.
If you’ve previously rented out your home, when it comes time to sell the home you may not be entitled to claim the full exemption for CGT. This is the case even if you've lived in the home as your main residence and only rented out a part of the home for a short period of time. Calculating the portion of the capital gain which is not exempt is complex and professional tax advice should be obtained.
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