“I earned money through Airbnb, Uber, freelancing, or an online platform. What actually needs to go in my tax return?”

Side hustles have become completely normal. Maybe you drive for Uber on weekends. Perhaps you rent out the spare room on Airbnb, hire out your caravan, pick up freelance jobs online, or earn a bit of money creating digital content. It can feel casual.

Unfortunately, the tax rules do not necessarily see it that way.

Income earned through sharing economy platforms will often need to be included in your tax return, even where the activity is occasional or only brings in a relatively modest amount.

What counts as sharing economy income?

It is much broader than ride-sharing and holiday rentals.

The source material includes:

• Uber, DiDi and other ride-sourcing services
• Airbnb, Stayz and other short-term accommodation
• hiring out cars, caravans, tools, parking or storage
• freelance and task-based work
• deliveries, cleaning and handyman work
• graphic design
• streaming and digital content
• selling digital products
• tips received through online platforms.

The key point is that small does not necessarily mean tax-free.

The ATO can see more than you might think

This is where things have changed significantly.

Under the Sharing Economy Reporting Regime, many online platforms are required to provide transaction information directly to the ATO. That information can then be compared with what you report in your tax return. If the numbers do not line up, the ATO may ask questions and make adjustments; interest or penalties can potentially follow.

So “I assumed the ATO wouldn’t know about it” is becoming a fairly risky strategy.

You may also have deductions

Declaring the income does not necessarily mean paying tax on every dollar you receive.

Depending on what you are doing, you may be able to claim legitimate expenses connected with earning that income, such as:

• platform fees
• vehicle expenses
• cleaning
• repairs
• equipment
• and other directly related costs.

The important part is keeping records that support the claim.

Watch the tax bill

Unlike wages, sharing economy income often arrives without tax being withheld. That means someone earning decent side income can get to tax time and suddenly discover they owe more than expected.

One simple strategy is to regularly put part of that income aside instead of treating the full amount as spending money. Depending on the size and nature of the activity, PAYG instalments may also become relevant.

And don’t forget GST! GST rules can also enter the picture.

Turnover thresholds may trigger GST registration for some activities, while ride-sourcing has special rules and generally requires GST registration regardless of the amount earned. 

Final thought

The sharing economy can be a fantastic way to make extra money. The easiest way to keep it that way is to treat the tax side seriously from the beginning.

If you earned income through an online platform this year, talk to your Aspen advisor before lodging. We can help make sure everything is reported properly and that you are not missing legitimate deductions along the way.