Tax time 2023: ATO to investigate more sharing economy platforms

New laws have given the Australian Taxation Office more teeth to catch people who don’t declare their income from Airbnb, Uber and other second jobs.

A surge in side hustles among Australians battling higher living costs threatens to lead to more tax investigations into those who don’t report their extra income.

The Australian Taxation Office is stepping up its data-matching processes to catch people who accidentally or deliberately forget to declare income from their second and third jobs, and says this will ensure no taxpayer gets an unfair advantage.

It could be a target-rich environment for the ATO, as new Bureau of Statistics figures show second jobs jumped more than 10 per cent in the year to March 31.

ATO assistant commissioner Tim Loh said new rules starting in July would give it better visibility of people earning income from sharing economy platforms.

“While the ATO has received data from a number of digital platforms in the past, this legislative change means more platforms will be required to regularly report into the future,” he said.

ATO assistant commissioner Tim Loh says more data sharing is here. Picture: Supplied

“We are continuing to receive more and more data, which our supercomputers and data scientists are analysing.

“This isn’t a game of Guess Who, as our sophisticated data-matching programs provide us with all the clues we need to track down taxpayers with incorrect information in their tax return.”

On July 1 a new law requires platforms to report transactions to the ATO. It is in two stages, starting with taxi services, ride sourcing and short-term accommodation platforms that must report by January 2024 – including Uber, Shebah, GoCatch, Airbnbn and Home Away.

From July 2024 it expands to all other platforms including Uber Eats and Airtasker.

Mr Loh said information retrieved from the platforms would be matched against what people reported in their tax returns.

The ATO’s existing data matching systems already examine some platforms and have monitored data such as ride sourcing driver details, transactions and bank account information.

Perks Accountants and Wealth Advisers director of tax consulting Neil Oakes said the ATO had made it “abundantly clear” that side hustles would be a focus this year.

“They now have the technology and information to locate and quantify income that is not being declared,” he said.

“As a general rule, anytime you receive money, goods or services in exchange for you doing something, it is likely that you will need to report the value received in your tax return. There are exceptions, of course.”

“Don’t forget that if you are including income in your taxation return, you will also be entitled to claim tax deductions against that income, providing that the expenses are directly related”.

Accountant Gregory Voukelatos says most people make honest mistakes. Picture: Supplied

Gregory Voukelatos, an accountant at dmca advisory, said if people did not include side hustle income on their tax return, the ATO would consider it as making false or misleading statements.

“Depending on how severe the ATO assesses the situation, the penalties can be either 25 per cent, 50 per cent or 75 per cent of the shortfall amount,” he said.

“I think most people do not want to do wrong by the ATO and in most cases, they will unintentionally forget to declare small income amounts. This will happen where they are unaware of the reporting requirements by the ATO.”

Mr Voukelatos said some side hustles could be considered hobbies that did not need to be declared. “For example, making cakes at home just as a leisure activity, and being asked to bake one for a friend who pays you for that,” he said.

“For side hustles, especially with Airbnb and ride sharing services, there is a lot to consider. It would be worthwhile to see a tax agent to assist in the process of completing your tax return.

“A good way to track and account for income from your side hustle is by having a separate bank account. Look into setting up a separate bank account to have only income and expenses that relate to the side hustle go through this bank account. It will make everything easier come tax time.”

Originally published as Tax time 2023: ATO to investigate more sharing economy platforms