You need to stay on top of regulatory changes and best practices if you own a small business in Australia. And guess what? It's been a big year for reporting on the sharing economy.
The Australian Taxation Office has implemented a system where business platforms that manage sharing economy transactions now need to report that information to the ATO. Think Airbnb, Uber, Uber Eats, etc.
The aim is that they will be able to match this data with the tax returns of the individuals who are providing these services to make sure they are including all their income in their tax returns. So, if you're involved in the sharing economy, it's important to understand these changes to avoid any compliance issues.
Our blog post will guide you through the new reporting regime and highlight the key changes. Read this blog if you really want to avoid costly mistakes and understand the regulations for operating in the sharing economy.
The Sharing Economy Reporting Regime (SERR): A Brief Overview
Let's start by understanding the sharing economy first!
What is the Sharing Economy?
“Sharing economy” refers to the economic activity facilitated by online platforms, such as apps or websites, that basically connect buyers (users) to sellers (providers) of goods and services.
For many decades, people have shared their resources, abilities, and time with others in need in exchange for some money. This trade was done mostly between families and neighbourhoods. Sharing economies allow individuals to make money on those underused assets.
But with the development of the internet and technology, it is now far easier for everyone to trade their extra goods and services with people all around the world. The sharing economy as we know now was propelled by technology.
Today's enterprises, like Uber, Airtasker, and Airbnb, have discovered methods to keep utilizing technology that makes it simpler for those in need and those with more resources to connect with one another.
Popular sharing economy platforms include:
● Car Renting - Ride sourcing services
● House Renting - Short-term room/apartment/house renting services
● Peer-to-Peer Lending
● Hiring freelancers
● Coworking Spaces - Sharing physical assets including offices, cafeteria, or any other infrastructure.
● Fashion sharing - Renting or reselling clothes
● Grocery delivery services.
Implementation of SERR
The sharing economy has transformed sectors like ridesharing and short-term accommodation, creating chances for people to make money. According to RateSetter, Australia's sharing economy, which had a value of over $15 billion in 2017, will grow to $55 billion by 2022, with two-thirds of Australians actively using sharing economy services to spend money or make money.
However, with these opportunities come additional reporting duties. Operators of electronic distribution platforms are now obligated to record specific transactions under the Sharing Economy Reporting Regime (SERR).
Starting from 1 July 2023, taxi travel, including ride-sourcing, and short-term accommodation bookings of 90 consecutive days or less fall under the SERR. Other reportable transactions will be included starting from 1 July 2024.
Why was the SERR implemented?
The ATO's focus on the sharing economy extends to individual taxpayers, especially those who may be unaware of their tax obligations or assume their activities constitute a hobby rather than a business. ATO implemented SERR changes to:
● Increase community confidence in the integrity of the tax systems.
● Identify and educate participants who fail to meet their obligations.
● Promote voluntary compliance.
● Gain insights into compliance strategies
● To ensure correct reporting and payment of tax obligations.
You must be aware of your income tax duties if you own a small business in Australia, or if you’re a lender or a landlord. Any payments received for services provided or in the form of rent are considered assessable income. The only exceptions are for cases where the activity can be categorized as a hobby or recreational pursuit.
Bookkeeping Support for Small Business Owners in the Sharing Economy
The changes to reporting in the sharing economy require small business owners to navigate complex bookkeeping rules. But if you want to save the real hassle, hire a professional bookkeeper. You can assure compliance, save time, and concentrate on operating and expanding your business.
So, small business owners, make sure you're in the know about the taxation changes in the sharing economy. Don't let the complexities of reporting hold you back - leverage the benefits of working with a bookkeeper, and embrace the opportunities offered by the sharing economy.
Check out the ATO’s information here:
Ready to streamline your finances and take control of your business? Contact our expert bookkeepers today to get started.