Australia: The sharing economy and tax (Gig Economy)

The sharing economy and tax (Gig Economy) Popular sharing economy activities include: 

• ride-sourcing (also known as ride-sharing) services for a fare, on platforms Uber, Hi Oscar, Ola, Bolt, Shebah or GoCatch or Didi
• renting a room or a whole house or unit shortterm, on platforms Airbnb, HomeStay, Outdoorsy, VILLASdirect, HomeAway, Vrbo, onefinestay, HomeAway, or Flipkey 
• sharing assets, cars, caravans/Recreational Vehicles, car parking spaces, storage space or personal property, such as Camplify, Car Next Door, Sixt, Car2go, DriveNow, Zipcar, Getaround, Turo, Maven, Urbi, Spacer, Toolmates or Quipmo 
• providing personalservices, creative or professional services, graphic design, creating websites, or odd jobs like deliveries and furniture assembly, such as OneFlare, Mad Paws or Hark Hark. Often referred to as the ‘gig economy.

However, you still need to consider how income tax, GST and other obligations may apply if you earn income from these and other gig economy activities. 

Ride-source 

• a driver makes a car available for public hire for passengers 
• a passenger uses a third-party digital platform, website or app, to request a ride 
• the car transports the passenger for payment the fare. 

Income tax applies to all ride sourcing income and is also subject to goods and services tax (GST). All ridesourcing drivers must have an Australian business number (ABN) and be registered for GST. 

For GST you need: 

• an ABN 
• to register for GST from the day you start, regardless of how much you earn 
• to pay GST on the full fare 
• to lodge business activity statements(BAS) monthly or quarterly (cannot elect to lodge annually) 
• must provide tax invoices for fares over $82.50 (Including GST if requested)

For income tax you must: 

• include income you earn in income tax return 
• only claim deductions related to transporting passengers for a fare, including apportioning expenses limited to the time you are providing a ride-sourcing service 
• keep full records of all expenses and income. 

Renting out all or part of your home 

When you rent out all or part of your residential house or unit on a digital platform, you must: 

• keep records of all income earned and report it in your income tax return 
• keep records of all expenses you can claim as deductions 
• do not need to register or pay GST on residential rent you earn. 

Income and deductions for renting out your home 

If you rent out all or part of your house or unit, the payments you receive are assessable income: 

• declare the income as “rental income” in your tax return 
• only claim deductions for associated expenses – apportioned: 

1. for the time the room/property is rented (or occupied for payment), and
2. to reflect only the part of the property that is rented 

How capital gains tax applies 

You make a capital gain if you sell a CGT asset, such as a house, and make a profit. Any gain you make is assessable income, must include the amount in your tax return in the year you make the gain. The amount of tax you pay on a capital gain depends on: 

• date purchased 
• date sold 
• cost of the asset 
• your other taxable income 
• how you use the asset. 

Capital gains from the sale of your main residence is usually exempt from capital gains tax (CGT). Unless you use your main residence to earn income, if you rent a room, you will no longer eligible for the full CGT exemption. You will lose a portion of your main residence exemption based on the floor area rented out, and the length of time rented. 

There are some circumstances where you will not lose the CGT main residence exemption. Such as you move completely out of hour main residence to live in another home for a period of time.

If you use a sharing economy platform to rent out all or part of a property that you do not own, CGT does not apply.