Media Release: Airbnb Law Should Change
Tax Services Australia is calling on the Government to change the tax law, so homeowners do not pay more tax than tenants through Airbnb and similar services.
The Australian Taxation Office today commenced a marketing campaign through various Australian media outlets to alert taxpayers earning income from the sharing economy, that they should report all income to their income tax returns.
The ATO revealed that they will be obtaining information directly from intermediary platforms, such as Airbnb and uber, to see if payments made to taxpayers have been reported as income to taxpayer income tax returns.
Principal of Tax Services Australia, Mr Darren Hooper CA, warned that taxpayers are not treated equally, where they are earning an income from their property via a marketing platform such as Airbnb.
“A tenant of a property, that sublets their property via Airbnb, simply needs to report the income they derive from the platform, and should also claim pro-rata deductions relevant to that income”.
The legal anomaly, is where an individual is earning income from a property that is also their main residence, or part of their main residency.
“The ATO says that you may be compromising your tax free ‘main residence’ exemption for capital gains tax purposes”.
“If you are a tenant, you just pay tax once on the income. There is no main residence exemption to lose. But if you are living in your main residence and list it or part of it on Airbnb, you pay tax on the income, and pay tax again on the lost CGT main residence exemption, when you eventually sell your home”.
“That might be in the same year, or many years down the track.”
“The tax payable on the lost tax free status of your home, could easily exceed the income you earn from ‘sharing’ your home.”
Mr Hooper suggests that the tax law should be changed, so home owners are not exposed to more tax than people listing on Airbnb, properties they do not own.
“The government should change the tax law so that homeowners do not sacrifice their main residence exemption by participating in the share economy.”
“They should not pay tax twice. They should not lose their main residence exemption”.
He also warns that the ATO are only focusing on the income.
“The ATO are only collecting details of the income taxpayers are receiving in the sharing economy, to check you have shared that income with the ATO in your income tax return.”
“They are not collecting any of the expenses, or helping you with any of the deductions you are entitled to.”