Sharing-economy platforms such as Uber and Airbnb will be required to share data about their users with the Australian Taxation Office (ATO) under a proposal outlined today by Treasury to crack down on non-compliance in the sector.
Responding to a Black Economy Taskforce recommendation, Treasury has released a consultation paper canvassing views on the best way to increase compliance with tax obligations in the sharing economy.
While gig-economy workers are already required to pay tax, the current process for paying GST and income tax is considered cumbersome, requiring participants to keep arduous records.
Treasury has put forward a model where platforms such as Uber and Airbnb would share data with the ATO, providing it with relevant information so that tax forms for industry participants can be pre-filled.
This would significantly simplify tax-reporting requirements for sharing economy participants, but also make it harder for many in the system currently falling under the radar to continue doing so.
An option that would see banks provide data on gig-economy workers to the ATO was also floated, but is not preferred by government.
Australia’s sharing economy was valued at $15.1 billion in 2017, while an estimated 10.8 million Australians were predicted to have earned extra money in the industry from July to December 2017.
According to Tony Greco, general manager of technical policy at the Institute of Public Accountants and a member of the Black Economy Taskforce, it’s hard to put a number on how much tax is being missed.
However, he says it is definitely “a big number”.
“The sharing economy is now taking off, it’s too big an activity to leave unnoticed,” he tells SmartCompany.
“What we’re trying to do here is blow away myths you don’t have to pay tax and force compliance.”
Greco says under the plan sharing-economy platforms would likely be asked to share income, ABN details and tax file numbers with the ATO so it can link details to specific taxpayers.
Assistant Minister for Treasury and Finance, Senator Zed Seselja, said in a statement today the government is moving to address underreporting in the sector.
“More and more Australians are making use of the greater choice provided by platforms like Uber and Airbnb, leading to significant growth in the sharing economy.
“But as it grows, there is a risk that some individuals are not reporting their full income and avoiding the right amount of tax,” he said.
“The Government is working with the sector on the best way to fix this issue.”
Uber, Airbnb, Airtassker, Deliveroo, Uber Eats and others would be required to comply with the new reporting regime if Treasury’s proposal goes ahead.
An Uber spokesperson said it was planning to participate in the consultation process.
“We look forward to participating in the upcoming consultation process and working with Government on ways that make it easier for driver partners using the Uber app to meet their tax obligations,” the spokesperson said.
The ATO has previously warned sharing economy participants about not meeting their tax obligations.
Assistant commissioner Kath Anderson said last year that participants couldn’t avoid tax by pretending it was a hobby.
“No matter how little you earn through car sharing, it is important to include it in your tax return. It’s no different to anyone else renting out an asset, like a house or a car park. You must declare the income and you cannot avoid tax by calling it a hobby,” Anderson said in a statement at the time.
Sharing economy startup CarNextDoor has also welcomed the Treasury consultation.
“We think it’s great that the ATO is planning on working with the sharing platforms to make tax time easier for sharers – it shows how much value the sharing economy is generating for Australia’s broader economy, the community and the environment,” CarNextDoor communication manager Kate Trumbull tells SmartCompany.
“The ATO recently came out with a clear statement about all the deductions car-sharers can claim, from insurance to depreciation. We give members a summary each year to help them do their tax, but it could make it even easier for people if the ATO were able to pre-fill the earnings information.”
Spacer.com.au and Sharing Hub chief executive Mike Rosenbaum also welcomed the discussions.
“Our member companies regularly advise users to seek advice from tax professionals and to declare their income. Our members take the privacy of their users very seriously and will enter the discussion with this in mind,” he said in a statement.
This article was updated at 9:30 AM AEDT January 24 to add additional commentary.