If you provide a good or service though a Collaborative Economy platform you may have tax obligations.
Examples could include:
- Renting out or letting a room or other property for accommodation
- Renting out or letting a car parking space
- Doing odd jobs, errands, deliveries or more skilled services on an ad hoc basis
- Using a car to transport members of the public for a fare
The tax laws which apply to activity conducted in a conventional manner apply in the same way to activity conducted in the Collaborative Economy.
Read on for a summary of the income tax and GST implications. For more detail, head to the Australian Tax Office (ATO).
Income tax implications for providers: a summary
In some instances, letting out a room, letting out a parking space, or doing other activities for payment will mean that you are earning assessable income regardless of whether you are carrying on a business.
If you are earning assessable income from providing Collaborative Economy services, you need to keep records of:
- income from that activity and
- any allowable deductions, which may need to be apportioned for private use.
These records will help you to include these amounts in a tax return and pay any tax owing from your activities on time.
If you are receiving a payment for some type of Collaborative Economy activity, you can check with the ATO whether you need to declare the income, what expenses you can claim and if there are any other special rules. You can also apply for a private ruling.
What are the GST implications for providers?
If you are engaged in Collaborative Economy activities where you let a room, let a car parking space or do other activities for payment, you may have a GST obligation where you have an 'enterprise'.
For example, if you rent out a property or provide a service on a regular basis to make money, this is considered to be an enterprise (even if it is not a business).
You need to register for GST if your annual turnover from your Collaborative Economy enterprise is $75,000 or more. If you have another enterprise with under $75,000 in turnover, but the combined turnover from that activity is over $75,000 you will also need to register for GST.
Where you do have an enterprise and you are required to be registered for GST, you will need to:
- charge GST when you make a taxable supply
- claim any input tax credits you are entitled to
- lodge an activity statement and remit any net GST from your activities
Note that there are special input taxed rules about accommodation.
If you are already registered for GST for another purpose, your activities in a Collaborative Economy enterprise must be included with your other activities.
If you are receiving payment for some type of Collaborative Economy activity, you can check with the ATO whether you need to be registered for GST, whether you can claim input tax credits and if there are any other special rules. You can also apply for a private ruling.
Important update: On 17 February 2017 the Federal Court of Australia handed down its decision that ride-sourcing is taxi travel for GST purposes. This means that if you are providing a ridesharing service to customers you are required to be registered for GST regardless of your turnover. The Court’s judgment (Uber B.V. v Commissioner of Taxation  FCA 110) is available on the Federal Court of Australia’s website. Visit the ATO website for detailed information on what this means for you.
Tax information for new platforms – how the ATO can help you
You’ve had a great idea for a new Collaborative Economy platform. You’ve built it, tested it, maybe received some initial seed funding. But have you considered the tax obligations for both yourself and providers that use your platform?
Wouldn’t it be great if you could help your providers simplify their tax obligations?
If you talk to the ATO early they can help you by preparing specific advice for your business which you can then pass to your providers. At tax time, you may even be able to feed earnings information directly to the ATO on behalf of your providers, making the process of completing their tax return much simpler.
What do I need to do?
- Keep records of all income earned through Collaborative Economy platform
- Keep records of any expenses you have incurred in the course of providing a good or services through a Collaborative Economy platform
- Check whether you need to get an ABN and register for GST
- If you have any doubt about your tax obligations, contact the ATO
Mandy: Accommodation sharing
Mandy owns the house she lives in and likes to go on holiday over summer every year. While she is away, she is thinking about leasing her home to other holiday-makers through an online platform. Mandy estimates she will earn about $5,000. What tax implications might this have?
- By renting out her house while she is away, Mandy is earning assessable income. Mandy must declare the income received from renting out her house as rental income in her tax return.
- Mandy can claim deductions for expenses for the time period the house was rented out. Mandy is entitled to claim deductions for expenses related to earning the income like mortgage interest, insurance, rates and advertising costs for the online platform. Mandy needs to ensure that she only claims expenses for the period the house was rented out which means she will need to apportion some of the expenses.
- Mandy may not be entitled to the full main residence exemption from capital gains tax which means she may have to pay capital gains tax (CGT) on part of any capital gains made when she sell the house.
- Goods and services tax (GST) doesn’t apply to residential rents so Mandy is not liable for GST on the rent Mandy charges and she can’t claim GST credits for associated expenses.