The shared economy and tax

By Mark Chapman, Tax Communications Director at H&R Block

The so-called ‘shared economy’ has changed how we eat, travel and even complete household chores. Companies such as Uber, Airbnb and Airtasker are having a profound impact on our daily lives, usually offering convenience as well as cost-effective solutions. For those who provide services through those companies – and the thousands of others who operate through similar, less well known shared economy facilitators – it’s essential to stay on top of your tax obligations.

The golden rule is that income you earn while providing services in the shared economy is nearly always taxable. Set against that, you can usually deduct any expenses which you incur in providing the service.

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UBER Tax Tips & Advice

At the forefront of the shared economy is Uber, the real time ride-sharing firm that has revolutionised how we travel. While Uber has emerged as a relatively straightforward way to earn a side income, it could also leave its drivers with an unanticipated tax bill should they be unaware of the tax implications of driving a ride-share vehicle.

From August 2015, the Australian Tax Office (ATO) confirmed all Uber drivers are required to register for GST. This means that drivers must account for GST on all their fares (in a similar way to taxi drivers) and can claim GST back on most of their expenses. This is done by submitting a quarterly BAS.

In a recent Federal Court case, Uber argued that its drivers are only obliged to register for GST when they reach the $75,000 turnover enjoyed by most small businesses, not the $1 threshold which applies to taxi drivers. The ATO won the case, confirming their original advice from August 2015. This makes it extra important that drivers get their GST right – the ATO are likely to look closely at drivers who aren’t complying.

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As for your income tax, here are a few tips to help you get it right:

• Your gross Uber income must be declared on your income tax return.

• You can claim deductions for all costs which relate exclusively to your Uber activity such as:

  • Fees and commissions paid to Uber

  • Provisions of water and mints to passengers

  • Costs of insurance relating your Uber activity

  • Motor vehicle costs related to your Uber activity. Remember to keep a logbook and remember too that you can claim for the costs of driving to, from and between pick-ups, as well as the costs linked to the actual fare-paying journey. Claim for things like fuel, servicing, cleaning, etc.

• You can claim a deduction for the business-related proportion of certain other costs, such as expenses incurred in running a home office, mobile phone bills, internet fees, etc.

• You can claim depreciation on capital items used in your business, notably the car itself. You can claim the $20,000 instant asset write-off for capital items costing less than $20,000 purchased before 30 June 2017. That could include items such as laptops, tablets and even the cost of a car itself (it may need to be second hand to come in under the $20,000 threshold).

For more tax tips for Uber drivers and professional advice visit H&R Block.

AIRBNB Tax Tips & Advice

Similarly, Airbnb hosts should recognise that earning extra money requires special attention to your taxes.

Above all else, the extra income you take in from offering up your home on the website will be taxable. However, expenses incurred in running your Airbnb activity will also be deductible.

Here’s some advice to follow to help you get it right:

• Where you rent out part of your home, you can claim all expenses which relate exclusively to your Airbnb hosting, such as Airbnb fees, marketing costs, professional photography, etc

• Where you rent out part of your home, you can claim a proportion of expenses which relate to the whole home, such as heat, light, mortgage interest, internet, rates, etc. Allocate expenses based on floor area.

• You can claim a deduction for depreciation of capital items used in your Airbnb activity, such as furniture (beds, sofas, etc). If the item is used partly for Airbnb hosting and partly private, you’ll need to apportion the claim.

• You can claim expenses for the whole period the property, or part of the property, is available for rent. Actual occupancy isn’t relevant – provided the property is marketed as available, a deduction should be available.

• Residential rents are typically exempt from GST so Airbnb renters don’t normally need to register and account for GST. That basic rule can be compromised where you offer serviced apartments, hotel-like accommodation or bed and breakfast services so it pays to take advice before launching into Airbnb hosting.

• Beware the loss of some of the capital gains tax exemption on your home if you rent out part of your house. The CGT exemption isn’t available for parts of your house which are used to generate assessable income – like earning rent – so you may lose part of the exemption when you sell. That could land you with an unwelcome and unexpected CGT bill!

For more tax tips for Airbnb hosts and professional advice visit H&R Block.