As the sharing economy becomes more prevalent and fundamentally reshapes many sectors of the economy, the government is scrambling to contain the fallout.
While there is no standard definition of the term sharing economy, it is usually taken to involve two parties entering into an agreement for one to provide services, or loan personal assets to the other in exchange for payment.
Examples in a wide variety of sectors include Uber, Airbnb, Car Next Door, Menulog, Airtasker, and Freelancer to name a few. With the rapid expansion of the sharing economy platforms, the Black Economy Taskforce noted that without compulsory reporting, it would be difficult for the ATO to gain information on compliance of sharing economy participants without the use of targeted audits and that formal reporting requirements would align Australia with international best practice.
On the back of that report, the government has now released draft legislation for consultation to define the scope of compulsory reporting requirements in order to ensure the integrity of the tax system and reduce the compliance burden on the ATO.
This new compulsory reporting regime will apply to all operators of an electronic service, including websites, internet portals, apps, gateways, stores, and marketplaces. Any platforms that allow sellers and buyers to transact will be required to report information on certain transactions. However, the reporting requirement will generally not apply if the transaction only relates to the supply of goods where ownership of the goods is permanently changed, where the title of real property is transferred, or the supply is a financial supply.
Based on the draft legislation, platform operators will be required to report transactions that occur on or after 1 July 2022 if it relates to a ride-sourcing or a short-term accommodation service unless an exemption applies. From 1 July 2023, all other categories of sharing economy platforms will be required to report unless an exemption applies.
While the ATO will ultimately be responsible for determining the exact information to be reported, at a minimum, the following information is expected to be required once reporting commences:
- seller’s identification including full legal name,
- date of birth,
- primary address,
- bank account details,
- telephone and email details;
And consideration and transaction information including
- total gross and net payments to the seller,
- GST attributable to gross payments,
- total fees/commissions withheld,
- GST attributable to total fees/commissions,
- property address (if the transaction relates to the rental of real property),
- and period for which property is booked during the reporting period.
It is expected only the aggregate or total transactions relating to the seller over the reporting period will need to be provided and information will not need to be provided on a transactional basis.
Again, while the ATO will ultimately determine the frequency of reporting, the initial reporting is expected to be on a biannual basis (ie 1 July to 31 December, and 1 January to 30 June) with the relevant information to be reported by 31 January and 31 July respectively.