The ‘gig economy’: Are your tax obligations staying up to date?
As technology becomes more sophisticated and more tech startups get off the ground, the gig economy is carving out a niche in the Australian financial sphere that is difficult to ignore. But is the tax legislation adapting fast enough to keep up with this new type of income?
More and more Australians now have another business or ‘side hustle’ – whether it’s tutoring, driving for Uber or Lyft, renting rooms on Airbnb, selling their services on Fiverr or Airtasker or running online retail through Ebay or Gumtree.
A key feature of many of these operations is that they are nimble, small in scale, have irregular and variable earnings and frequently cannot be tied to a geographical location – things that can make it difficult for the ATO and the bloated and extremely complex tax legislation to keep up with.
Many of the crowd-sourcing or gig-economy operators also do not have the same mandatory obligations to report their operator’s earnings to the ATO, unlike banks, which report income, or corporate entities which report dividends.
By-and-large most gig-economy workers are compliant with their tax obligations but the constantly-increasing scope and presence of the gig economy means that the ATO is becoming increasingly concerned about tax ‘leakage’ from workers who might be underreporting income earned through a side business, either deliberately, or accidentally due to unfamiliarity with their tax reporting obligations.
Some steps are already being taken to make it easier for workers to meet their tax obligations, such as a recent change by the ATO to provide a summary statement for the deductions that car-sharers can claim, making it easier for users to pre-fill information on their tax returns. But the growth of the gig economy shows no signs of slowing, and it is unlikely that the relevant legislation will be able to keep up with the pace.
- Call us on 08 8362 5269
- Email email@example.com
- Fill in our enquiry form here
- Visit our office at 133-135 Rundle Street, Kent Town SA 5067