ATO crackdown on sharing economy could take bite out of your income

The sharing economy started out as a promising way to make a few extra bucks by renting your spare bedroom. Since then, it’s grown into a $15-billion a year titan used by more than 10 million Australians, and is now a universally accepted method to generate a little more income.

However, your sharing economy cash goldmine may soon leave you with a little less in your pocket.

Faith Davey has earned more than $50,000 hiring out her motorhome in the past 16 months.

The Australian Taxation Office is looking for better ways to ensure that those raking in extra cash in the black economy are paying their fair share of tax.

Global accommodation giant Airbnb recently provided data to the ATO to help it identify those not paying tax on rental income, or who may have over-claimed deductions.

Ride sharing platform Uber and handyman and odds jobs portal Airtasker are also firmly in the tax office's crosshairs.

The sharing economy is officially defined as the process of sharing access to goods and services through any online platform.

While the sharing economy has changed the way we do business, it hasn’t changed the ATO’s definition of income

Australian Taxation Office

Basic sharing, such as bartering goods and services, has been in existence for decades but growth of the sector has exploded in recent times to now include anything from renting out parking spaces to doing odd jobs, errands, deliveries or trades.

An ATO spokesperson said participants in the sector need to ensure they declare all sharing economy income. It now has data matching ability and has entered into arrangements with major platform providers to gain access to financial information about their users.

“While the sharing economy has changed the way we do business, it hasn’t changed the ATO’s definition of income," the spokesman said.

"Any income earned needs to be declared, even if it’s just a one-off.”

Happy earners

Melburnian Peter Noble is one of the millions who has carved out a regular income in the sharing economy. He manages three popular properties listed on global accommodation giant Airbnb – in Brighton, Sandringham and another that sleeps 24 people on the Mornington Peninsula.

Collectively, the properties enjoy strong occupancy rates. He’s even managed to qualify for Airbnb’s "superhost" credentials and boasts more than 100 positive reviews on the platform.

Mr Noble said he has turned the venture into a "decent earner," running a profit and loss statement to keep track of all the financials.

“I’d love to build it up into a more substantial business, but I’d probably need more properties in my portfolio to do that,” he said.

However, Mr Noble has no qualms about Airbnb handing over data about the income he has earned to the ATO.

“If you’re earning an income, you’ve got to understand that brings tax obligations with it,” he says.

“If you’re advertising your property on a site like Airbnb, you’re exposing yourself to the tax office. There’s always a trail if you’re earning income,” he says.

Mother of two Faith Davey, 42, decided to let others hire her motorhome after a trip around Australia. She has earned $50,000 in income via Camplify in the past 16 months alone.

“I’ve been able to create a new career, which allows me to spend more time with my children and, hopefully, inspire more women and single parents to get out an explore the great Aussie outdoors,” Davey said.

Recent research by sharing economy platform The Sharing Hub shows that people taking part in the sharing economy can earn an average of $1,126 a month.

The extra cash can help pay rent or mortgage costs or aid in saving to buy a property, the group's chief executive Mike Rosenbaum says.

The Sharing Hub educates people on the importance of declaring income but participants should also seek advice from an accountant, he says.

“Many platforms provide users with tools to help make the process simpler, from tax invoices for transactions, annual statements and dashboards with earnings and costs,” Mr Rosembaum says.

Sharing economy is not tax-free

♦ Declare all your income.

♦ Only claim deductions for money spent that directly relates to the income earnt.

♦ Keep accurate records so you have evidence of claims made.