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The ATO’s expanded reporting requirements on the sharing economy will find increased levels of non-compliance, says CPA Australia.
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Gig economy reporting regime ‘will expose tax underpayments’
31 January 2023
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Substantial tax underpayments by those in the gig economy and complications with existing taxes will be exposed when the ATO raises the bar on reporting requirements from the end of this financial year, according to CPA Australia.
It says the ATO needs to embark on an education campaign to alert users of apps and websites such as eBay, Uber, Airtasker, and Airbnb about their liabilities as the office sets its sights on the $6.3 billion sharing economy.
“We anticipate that the increased visibility of income data to the ATO will lead to the detection of many instances of potential non-compliance,” CPA Australia said in its submission on the matter.
“In addition to unreported income, technical issues may arise such as the interaction with GST, withholding and deductibility of expenses, as well as administrative issues related to record-keeping and substantiation.”
It said many of the 250,000 working in the sharing economy would be unaware of their increased obligations and that could leave the ATO facing a whole range of issues.
CPA Australia said the ATO should embark on a campaign to inform gig workers about the changes and help them understand the additional requirements.
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“We suggest that the ATO considers how best to inform sellers of the breadth of their obligations and help resolve their issues,” it said.
“We recommend that an extensive campaign be developed in collaboration with EDPs (electronic distribution platforms), professional associations and taxpayers.”
“This should include an educative and light-touch compliance approach for the first years of implementation, targeted communications and streamlined objection procedures for when data has been incorrectly matched.”
The association said with a low level of awareness among sellers in the sharing economy, accountants and tax agents would again be forced to play a key role in educating and assisting clients.
“Tax agents will play an important role in educating clients as well as resolving enquiries from the ATO,” it said. “For some agents there may be multiple years with many technical issues to address.”
“Visibility of matched data, clear guidance, ATO technical support and transparent compliance and objection procedures will be required so that agents can best assist taxpayers to meet their obligations.”
The expanded reporting measures for share economy taxi travel and short-term accommodation commence on 1 July 2023, while it begins for all other non-excluded transactions on 1 July 2024.
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