Page 101

Pindara Private Hospital Magazine - Issue Ten

FINANCE 2017 T a x C o n s e q u e n c e s OF THE SHARING ECONOMY The ATO has recently released guidance on various sharing-economy services. This article examines the tax consequences of two of the most popular aspects of this economy ridesharing and accommodation sharing. Given the rapid growth and projected growth of this part of the economy, it is important to know what those consequences are. BACKGROUND The sharing economy describes an emerging business model that connects users and providers who wish to share resources including the provision of services. Sharing economy arrangements are generally booked through a facilitator (such as Uber or Airbnb) using a website or app. Although many people consider sharing economy transactions to be private transactions (between the driver and passenger, and the home owner and renter) they have very real tax connotations for both the supplier and user. RIDE-SHARING Ride-sharing is a relatively new phenomenon and has, for many commuters, replaced taxi travel. Ride-sharing involves a driver (just a normal member of the public) making their car available for public hire. Users wanting a ride make a request through a phone app or website provided by a third-party facilitator such as Uber. The provider/driver of the car used to transfer the passenger is then paid a fare by the customer requesting the ride. The provider/driver then in turn may be charged a fee/commission by the facilitator. For the driver, the tax consequences are as follows: • GST – Early in 2017, the Federal Court dismissed Uber’s appeal of the ATO’s inclusion of ride-sharing as a ‘taxi service’ for GST purposes. The effect of this inclusion is quite profound in that drivers providing ride-sharing services (as with taxi drivers) must register for GST as soon as they start driving (rather than first needing to have a turnover of $75,000). Having registered, they must charge GST on the full fare, and they or Uber must provide a tax invoice to the passenger where the passenger requests it and the value of the fare is over $82.50 (including GST). On the upside, drivers are entitled to claim the GST component on business purchases associated with the travel such as fuel, servicing, registration, depreciation on the vehicle etc. However, these claims must be apportioned to take account of any private usage of the vehicle. • Income Tax – The fares received by drivers must be included in their assessable income on their tax return. Any commission charged by the facilitator (Uber) can be claimed as a deduction, as can the costs associated with the vehicle (see above). For the passenger, like taxi travel, businessrelated fares can be claimed as a tax deduction. From a GST standpoint, you are entitled to claim the GST on work-related fares. Where the fare is below $82.50 (most cases) you will not need a tax invoice to claim GST. Where it exceeds this amount, you should request a tax invoice. ACCOMMODATION SHARING The sharing economy provides a great opportunity for individuals with spare rooms or spare entire properties to rent out space and earn rental income using facilitators such as Airbnb. It is the ATO’s view that the tax law applies in the same way to income received in this way as it does to a standard rental arrangement, for example, through a real estate agent. That is, the amounts received from the customers/tenants must generally be declared as income. Deductions relating to making the room/property available can also be claimed, such as all or part of the interest on a mortgage, insurance, council water and rates etc. Note that if the room/property is let out at less than commercial rates, your deductions allowable may be capped by the ATO to the amount of rent you received. Likewise, the GST rules apply in the same way as normal. Renting a residential property is an input taxed supply, so no GST is charged on the rent, and no GST credits can be claimed on any associated expenses that the owner incurs in making the property available for rent (e.g. electricity, insurance etc.). When you rent out all or part of your home (whether through the sharing economy or through a real estate agent) you will only be entitled to a partial exemption from capital gains tax (CGT) when you later dispose of the property – this is irrespective of whether you actually claim deductions for any interest on a mortgage held over the property. pindaramagazine.com.au Pindara Magazine 99


Pindara Private Hospital Magazine - Issue Ten
To see the actual publication please follow the link above