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The government is currently considering a new reporting regime for the gig economy but questions have been raised over the time it has taken to implement a measure for the $15 billion sector.
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Tax concerns prompt new reporting proposals for gig economy
25 January 2019
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A Treasury paper released this week explores two different options aimed at implementing a reporting regime to cover sharing economy platforms such as Uber, Airbnb, or Deliveroo, to ensure Australians providing these services are paying the right amount of tax.
Australia’s share economy is estimated to be worth approximately $15.1 billion in February 2017, with Deloitte estimating that revenue generated by the collaborative economy in NSW alone increased approximately 68 per cent between 2014–15 and 2015–16, with an increase in users of 108 per cent.
Based off the Black Economy Taskforce’s recommendation, the paper proposes to either apply reporting arrangements to sharing economy platforms to capture all activities undertaken through the platform or to place a requirement on financial institutions such as banks or payment processors to provide sharing economy platform transaction data to the ATO for data matching and pre-filling purposes.
The Institute of Public Accountants general manager of technical policy, Tony Greco, said a reporting regime was a long time coming, noting the gig economy’s ability to create an uneven playing field for small businesses doing the right thing.
“Realistically, this should have been in place a long time ago. The gig economy hasn’t gotten this big overnight. The question is why haven’t they done this earlier,” Mr Greco told Accountants Daily.
“There is low-level compliance in relation to the gig economy and there are a lot of misconceptions – people adopt the mentality that ignorance is bliss and they don’t want to accept the tax consequences of some of their activities.
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“The government can’t ignore this growing piece of the economy and there are so many platforms out there that the size of the gig economy has gotten to the point where we are dealing with significant leakage in the tax system if you allow it to go along at these levels.”
Mr Greco, who sits on taskforce, believes the government should look primarily at the first option of going straight to the share economy platforms, with the reported information to be used by the ATO for income matching and to help pre-fill tax returns.
“It’s just like payroll – who’s the best person to get that information from, and it’s the employer, so using the analogy here, the source of the truth is the paying entity which in most cases is the platform,” said Mr Greco.
“It is voluntary compliance at the moment and the tax office can’t audit their way out of this problem. It is easier to go to the source and put a system in place and by exception, chase people who don’t accept it.”
The Treasury paper said it would consider exemptions to platforms of a smaller size, granting them a grace period from reporting obligations in the early stages of their business.
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