The Australian Tax Office (ATO) has noted a growing number of people have taken up side hustles during the pandemic. This has led to a growing number earning extra income that often goes undeclared at tax time. Amongst the highlighted online gig and share economy platforms that people are using to make such extra income are Uber, Airbnb, OnlyFans, Twitch, and Patreon.
Assistant Commissioner, Tim Loh, is warning that as long as a fee is being earned from the provision of labour, skills or goods, this is a taxable income. This applies whether the money is made on a digital platform or in the real world. Loh said that even one-off transactions had to be reported and recommended using the Pay As You Go (PAYG) Instalment system to help set aside tax payments as income was received, rather than suffer bill shock when lodging tax returns.
The ATO is warning that it is going to start cracking down on such undeclared incomes from secondary work. Those that evade paying these taxes are expected to be netted through the ATO’s data-matching program that is now collecting more information on everything from property and rent data to cryptocurrency transactions.
Access to details on those that earn from the gig economy will be further enhanced by new reporting laws that will require share economy platforms to provide information on transactions to the ATO. These disclosure laws are due to come into effect for ride-sourcing and short term accommodation transactions from 1 July 2022. Additional laws applicable to other share economy transactions will take effect from 1 July 2023.
Loh has confirmed that the ATO will begin receiving transaction data from providers facilitating these services, including financial institutions, ride-sourcing apps, short term rental websites, and online marketplaces. As more data is provided, there will be fewer places for gig economy earners to hide.
These earners are however being advised that they can claim certain expenses against this income. More so if they have kept receipts and the expenses directly link to the income earned. This can also include expenses from having to engage a tax agent to manage your tax affairs related to the business.
Taxpayers are being advised to keep good records and report all incomes to avoid delays in getting refunds. The ATO reports that over 230,000 returns are adjusted each year using third party data. Many of the adjustments relate to unreported incomes. This year the average refund amount was $2,709.
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