Online sharing economy platforms, which enable both businesses and consumers to sell goods or services to other consumers, have been flourishing in the past few years, but the taxation of those transactions has remained a gray territory.
For this reason, the Australian government wants to get more visibility into the activity of both the platforms and the sellers, and wants to make sure that all transactions on such platforms are properly taxed. To achieve this, it has decided to make the reporting of all transactions on those platforms mandatory. Platforms will need to send detailed information to the Australian Taxation Office (ATO).
In this article, we’ll look into the proposed new rules, and how the sharing economy in Australia will be impacted.
Who will be impacted by the new rules?
Both platforms and sellers will be impacted by the reform.
Sharing economy platforms, such as ride-hailing services, gig platforms, or rental and accommodation platforms (for example, Airbnb, Uber or Fiverr) will need to report all transaction data to the tax office.
Not only C2C (consumer-to-consumer) transactions are concerned, though: some transactions might also fall into the B2B, B2C and C2C category. In fact, all online platforms that facilitate trade between two entities will need to report transaction data to the ATO, unless goods (instead of rented) are actually sold and change owners.
What are the objectives of the new legislation?
The Australian government aims to make the trade on online gig and sharing economy platforms fair and transparent, and also to tax it properly. At the moment, a big part of the transactions on such platforms fall into a gray area and are not taxed. The ATO has minimal visibility and control over them or the income generated by sellers, as it relies exclusively on self-reporting.
The Australian Black Market Taskforce, which was created in 2016 and charged with combatting the black and gray economy, has issued a recommendation to implement a mandatory reporting regime for online platforms. This would also help the Australian government align with the best practices of other countries, as more and more governments are implementing mandatory reporting regimes.
How will platforms and sellers be impacted?
Both platforms and sellers will need to make sure they’re compliant with the new rules and that all transactions are properly declared and taxed.
As a result, income that previously went undeclared or under-declared will now be controlled by the ATO. In some instances, sellers might also need to register their business. Platforms, on their end, will be obliged to provide sufficient information to the ATO to enable them to audit sellers’ transactions as necessary.
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We are aware that new regulations have a substantial impact on how businesses operate. That’s why we built Fonoa Reporting, a solution that automatically reports sales transactions to tax authorities around the world.
If your business is affected by real-time invoice reporting obligations anywhere in the world, reach out to us, and we will help you automate the invoice reporting process.