The sharing economy is not a tax-free economy
Uber, Airtasker and Airbnb all require you to pay tax on your earnings.
"Sharing economy" services like Uber can be a useful way to make some extra money. However, as the 31 October due date for your tax return draws closer, it's worth remembering that you need to declare any income you earn through these services.
The Australian Taxation Office (ATO) position on this is perfectly clear: any income-generating activity must be declared as part of your return, as it notes in a guide for tax professionals. (From an ATO perspective, undoubtedly sharing economy income is attractive because, unlike cash-in-hand payments, it's somewhat harder to conceal.)
While you can potentially claim expenses associated with those extra sources of income, you need to make sure those are apportioned correctly. For instance, if you're renting a room in your house, you can only claim a proportion of household expenses such as electricity, generally based on the total portion of floor area you're renting out. Similarly, you can't claim the total cost of your car if you use it as an Uber driver a few hours a week. The ATO has a detailed guide covering the deductions that are likely to be allowed.
If your tax affairs are in any way complex, then seeking advice from an accountant or other expert makes sense. If you have a straightforward salaried full-time job and then do an occasional IKEA assembly task on Airtasker, you can potentially use the online myTax service. Either way, don't leave out those extra earnings, or you might wipe out their benefit entirely.
Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on finder.com.au.
- Property prices: You need a $100K deposit in every capital city – except this one
- Amazon Prime Day 2021 Australia: Early deals on now
- Power outage in Victoria: Don’t forget to claim for food spoilage
- Today’s ASX top stocks: Moneyme (MME ↑18.8%), Cd Private Equity Fund I (CD1 ↑18.5%)
- Amazon Prime Day: 60% off fashion deals you’re not going to want to miss