ATO assistant commissioner Tim Loh has urged individuals involved in the gig economy to come clean with their earnings as the Tax Office begins to crack down on undeclared income from secondary work this tax time.
“We know lots of people have picked up a side hustle during the pandemic,” said Mr Loh. “This has included a wide range of activities such as freelancing, setting up a local market stall or receiving income from subscribers through platforms like Patreon, Twitch or OnlyFans.”
“Generally, when you provide your labour, skills or goods for a fee, you need to report this income in your tax return.
“This applies regardless of whether you’re using a digital platform or more traditional means, such as word of mouth.”
The net on undeclared side income is getting tighter, with the ATO expanding its data-matching program in recent years, providing oversight over cryptocurrency transactions, gig economy jobs, share transactions, and property and rent data.
Those participating in the gig economy will also soon find it harder than ever to evade their tax obligations, with the government looking to introduce new reporting laws that will require share economy platforms to report information of all transactions to the ATO.
Draft legislation indicates that ride-sourcing or short-term accommodation transactions will be first in line for disclosure starting from 1 July 2022.
All other share economy transactions will fall under the new reporting regime from 1 July 2023.
“We receive income information from a range of providers including financial institutions, online marketplaces, ride-sourcing applications and short-term rental websites,” Mr Loh said.
“The data we receive is growing, which means the places to hide are shrinking.”
According to the ATO, more than 230,000 returns are adjusted each year using third-party data, with individuals commonly failing to include all their income, including interest, dividends and rental income.
So far this year, the ATO has paid out more than $15.3 billion in tax refunds, at an average of $2,709 per refund.
It has received over 6.96 million individual tax returns, with 5.63 million returns qualifying for a refund.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.