Money Doesn’t Come Without Guidance ...
The article contains information regarding taxpayers currently generating their part of income via sharing economy platforms. If you are an Airbnb host or Uber driver, or any other similar platform, information in this article will make your tax return easy.
Sharing economy platforms have become major in last few years. It is reported that one in 10 Aussie are now boosting their income via sharing economy activities. If you earn any income via sharing economy platforms and not sure if you have to declare your income. The answer is hard ‘yes’. It is an assessable income and you can claim deductions. Make sure keep your record regarding income earned and any expenses incurred related to that income earning activities.
Do I need to register for ABN and GST?
If you’re renting out your part of the house for short term or long term, you don’t need to apply for ABN or GST if your turnover is under $75,000 but, you can’t claim GST either. If you are renting out parking space in your house, you have to register for ABN. For air tasker workers, you don’t have to register for ABN but, if your service incurs expenses, you might as well register for ABN to claim those expenses.
ATO has a special rule for ride sourcing. For those provide ride sharing services, you must be registered for GST and ABN. (Link: https://www.ato.gov.au/general/ride-sourcing-and-tax/) However, for the rest of other cases, it is no obligation to register for GST if your turnover is under $75,000.
What expenses can be claimed?
Just like any other Australian business, you can claim business expenses under your ABN. The possible deductions you can claim are as follows:
• Commissions or fees paid to the platform e.g. the Service Fee
Costs of travelling to and from between jobs including:
• Travelling expenses - Public Transport, flights and accommodation if the job is interstate
• Mobile phone bills – business proportion of total usage
• Safety equipment (such as hi-vis vests)
• Sunglasses if you work outside
• Tax agent/accountants fee
• Bank fees (if you maintain a separate account for your business)
• Car expenses. If you use your car as part activity, you can claim deductions for business use of proportion includes parking and petrol.
You can choose either cents per kilometre method or log book method.
• Cents per kilometre: you can claim 66c per kilometre under 5,000 km and you can’t make further claim regarding other expenses.
• Logbook – You have to maintain a proper log book to claim this method. The logbook usually last 5 years but, there are circumstances that you have to update your logbook before 5 years. The claim is based on the business use percentage of expenses and, must be kept for a minimum 12 weeks period.
Deductions you can’t claim for
• Fines (parking, speeding, etc)
• Conventional clothing -if your job requires you to have white formal shirts or a pair of black pants, you can’t claim the expenses.
• Meals, drinks, etc purchased whilst on the job
Remember, all these expenses must have sufficient connection to your income earning activities.
How much tax generally I have to pay?
The amount of tax imposed on this income will vary on the size of your operation and turnover generated. In some cases, you might end up having 30~40% of tax imposed on your income from these activities. Hence, the safe option is to set your income earned aside for the end of the financial year regardless of how much you earned. This will prevent you from being under heavy tax payable and, if you are well in your record keeping game, you might have lump sum chunk of money you can invest or improve your business.
Do you need any help? Taxshark has an excellent team of tax agent ready for you to support.