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Tax strike on Airbnb providers, Uber drivers

AUSTRALIAN BUSINESS REVIEW   January 22, 2019   Simon Benson

Income from the share economy is now estimated at $15 billion a year. Picture: Emma Brasier

Almost 11 million Australians who earn money from sharing-economy platforms such as Uber and Airbnb will be subject to a new reporting regime to ensure tax is paid on income now estimated at $15 billion a year.

The crackdown would mean those platforms operating in Australia will be required to report data to the tax office so that the earnings of those participating in them could be properly assessed for potential tax liabilities.

Treasury will today release a discussion paper to consult with the industry on a mandatory reporting regime that would not only ensure tax liabilities were met but also cut red tape for mum-and-dad operators using the digital platforms.

The government has made it clear the mandatory system will be adopted and it does not favour Treasury’s second option of using banks and the financial sector to track income and transactions.

This would ensure compliance and let millions of Australians using digital platforms have their tax forms pre-filled rather than having to meet often onerous self-reporting obligations.

It is understood that entities such as Uber and Airbnb are working with the Australian Taxation Office on sharing data and providing direct reporting of the income earned by Uber drivers and those offering private rental accommodation under the ATO’s formal information gathering powers.

The reforms proposed in the Treasury paper, to be released today by Assistant Treasurer Zed Seselja, would expand the reporting arrangements to all shared economy platforms and standardise the way information is collected.

Senator Seselja said the reforms were aimed at delivering transparency and fairness into the sharing economy. “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,” he said.

“But as it grows, there is a risk that some individuals are not reporting their full income and avoiding the right amount of tax.”

As well as Uber and Airbnb, major players in the shared economy include online marketplaces such as Airtasker and delivery platforms such as Deliveroo and Uber Eats.

While the ATO believes most individuals and businesses are reporting tax obligations, there are a number that have not, leading to a loss of revenue that the government says would be used for delivery of services such as health and education.

The ATO at present is unable to calculate the amount of tax forgone by those either ignorant of their tax obligations or deliberately avoiding their liabilities.

The reforms are directed at participants of the shared economy rather than the platforms themselves, which come under the Coalition’s existing multinational tax regimes.

A report from the Black Economy taskforce was unable to say what the level of unpaid tax liabilities was for the shared economy, although it reported that many of those involved were meeting their obligations.

The new Treasury discussion paper, however, said data sharing by digital platforms would cut red tape for the 10.8 million individuals now engaged in the shared economy by allowing them to use pre-fill tax declarations.

Senator Seselja said the government “is working with the sector on the best way to fix this (tax payment) issue.

“We are committed to making sure people pay their fair share of tax. When everyone pays the right amount, it levels the playing field for businesses and people working in the sharing economy, creating competition and bringing benefits to consumers.”

Senator Seselja said the ATO had worked with several organisations in the ride-sharing and accommodation-sharing sectors to report income, and had seen excellent results to date.

The discussion paper says the number of people engaged in the sharing economy has grown significantly in recent years and the risk of sellers not paying GST or fulfilling their income tax liabilities is growing.

“This potential underpayment of tax undermines the benefits of the sharing economy to consumers and businesses, and creates an unfair playing field for those doing the right thing,” the report says.

The second option proposed in the paper was to require financial institutions such as banks or payment processors to provide sharing economy platform transaction data to the ATO for data matching and pre-filling purposes.

“Financial institutions are already required to report to the ATO on a number of different transactions to meet various legislative obligations, such as interest paid to account holders and investors,” the report says.

“Matching payments to an individual or entity could be assisted by the fact many bank account holders supply tax file numbers to the financial institution. This option could reduce the impact on sharing economy platforms.”

However, it is understood this would result in significant under-reporting and extra costs.

A spokeswoman for Uber said: “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.”

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