The Tax Office has called on tax agents to remind clients that if they rent, hire or share their car, caravan or recreational vehicle (RV) through a sharing economy platform, they will need to declare the income in their tax return and may have GST obligations.
The reminder comes after ATO Assistant Commissioner Kath Anderson signalled that the Tax Office would be focusing on taxpayers earning income through sharing platforms such as Car Next Door, Carhood or DriveMyCar Rentals, after evidence revealed that some taxpayers did not understand their tax obligations.
Clients will need to know that they must declare the income in their tax return, may need to pay GST on the amounts they earn, may be entitled to claim expenses as income tax deductions, may be able to claim GST credits and will need to keep records of their income and expenses.
The ATO have also urged agents to remind clients that if they are carrying on an enterprise of renting, hiring or sharing their car, caravan or RV sharing and are already registered for GST for another enterprise, then they must pay GST on the income they earn.
If they are not registered for GST but their expected turnover from all of their enterprises is $75,000 or more per year, they need to get an ABN, register for GST and pay GST on their earnings.
H&R Block director of tax communications Mark Chapman earlier told Accountants Daily that the rise and rush to rental or share platforms may have caught some clients out in terms of declaring such income on their returns.
“It might seem obvious to those of us in the tax business that this income is taxable, but I’ve certainly encountered taxpayers who had no idea that this income needed to go on their tax return – or indeed, that they can also claim tax deductions against the income,” said Mr Chapman.
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
With a focus on breaking news and exclusive analysis, Jotham keeps Accountants Daily readers up to date with company moves, tax updates and essential business and client strategy.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.