How does the ATO treat Uber, Airbnb style services?

Uber is calling for drivers, Airbnb is seeking more hosts but what are the implications of becoming part of the sharing economy?

The basics of tax apply regardless of how you earn money.  That is, even though you may be earning income from different sources or using different platforms to generate income, the fundamental tax issues remain the same. You don’t have to be carrying on a business to pay tax on income you earn.

And, given that so many of these services are through sharing platforms, the Australian Tax Office (ATO) has the capacity to data match money flowing through to financial institutions specifically from these platforms.

‘Sharing’ a room or an entire house

Sharing a room or your house through services such as Airbnb can be a great way to earn income from an existing asset.  The tax treatment of what you earn from these services is the same as any other residential rental property arrangement.  This means you must include the rental income in your income tax return.  For example, if a husband and wife jointly own a property that they rent out through a sharing service, whatever they earn needs to be declared on their income tax returns in the same proportion as the ownership of the house in the year they earned the income.

Hosts can also claim tax deductions for expenses associated to the rental, such as the interest on your home loan, professional cleaning, fees charged by the facilitator, council rates, insurance, etc.  But, these deductions need to be in proportion to how much and how long you rent your home out.  For example, if you rent your home for two months of the financial year, then you can only claim up to 1/6th of expenses such as interest on your home loan as a deduction.  This would need to be further reduced if you only rented out a specific portion of the home.

To find out more about the sharing economy, or if you are interested in letting out your space, come and speak to us Tax Ideas Accountants & Advisershttps://taxideas.com.au/booking/   Tel: (02) 8318 1545

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