ATO Blitz On Share Economy Income
Have you been earning money in the share economy, but not sharing this information with the ATO?
The ATO is very interested in income you have earned but not reported to your income tax return. How does the ATO know how much you have earned?
The ATO can easily access information about your bank accounts.
For example, generally banks report the interest income they pay to you, to the ATO.
They can also check deposits made to your bank accounts, but this can be cumbersome to determine what deposits are income and whether it has already been reported to your income tax return. A $1000 deposit, may already be captured as employment income, or income from the sharing economy, or a personal deposit from a family member and not relevant for tax purposes.
But there is an easier way!
The ATO has arrangements, increasingly, directly with platforms such as Airbnb and uber and others, where the amounts they pay to you, are reported to the ATO. Just as banks report the interest income to the ATO.
If the ATO find you have earned income but not reported this to your income tax return, an ATO review or audit may not be far away.
Also, if you have just sold your home, the ATO will know that too. This information is easily obtained from various sources, such as state revenue authorities around Australia.
And if you have ‘shared’ your home and earned income from it, then there is most likely a very unwelcome and harsh tax consequence for you in the form of capital gains tax. At least that is the ATO’s current interpretation of the law, and you may wish to check out our previous commentary at Airbnb – Has The ATO Got It Wrong?
The tax differences between home owners and renters sharing their homes, have tremendously different tax consequences.
The ATO will do whatever they need to do, to identify any income you may have earned but not reported to your income tax return, such as obtaining details of payments made to taxpayers by the likes of uber and Airbnb. But they will not go to any trouble at all, to try to determine the deductions you can claim, or any ‘main residence’ exemption adjustments for CGT purposes.
This is your responsibility. As well as fronting up with additional tax to pay any income earned was not reported to any income tax returns you have lodged, along with any interest and penalties the ATO may impose.
And remember, if you share your home on platforms such as Airbnb, you may need to pay need to pay tax twice – once on the income, and again on the disposal of your home in the form of a tax on your capital gain, adjusted for the remaining main residence exemption (if any).
That could hurt, a lot, especially if your home has increased in value significantly.
Tax Services Australia has been helping Australians with quality, independent and reliable taxation advice since 2001. If you have run into trouble with the ATO or wish to proactively plan and protect your personal tax situation, contact us today.