Share economy regime to expose GST, CGT compliance issues
Upcoming reporting requirements will significantly bolster the ATO’s data matching capabilities, says RSM.
The share economy reporting regime will extend the ATO's data matching powers with comprehensive information on those involved and expose issues with GST and CGT, according to mid-tier firm RSM.
“The reporting requirements for electronic distribution platforms are a way to collect and match data against what people using these apps and services are reporting on their tax returns,” said Myles Pover, principal of RSM’s business advisory division in Sydney.
“Use the Uber driver for example, an Uber driver will likely have an obligation to report to the ATO the income they are deriving from diving Uber, as well as pay GST to the ATO in respect to fares they are charging. In this case, the ATO will be checking the data reported to them by the electronic distribution platform (Uber) against what the driver has reported in their tax return.”
Another example involves a family holiday home rented out via Airbnb or a similar system. In this case, the rental income reported to the ATO will be checked against what the owner includes in their tax return as rental income.
The first tranche of the reporting regime starts 1 July 2023 and will apply to electronic distribution platforms that facilitate the provision of short term accommodation and taxi services.
Reporting for other types of services will commence from 1 July 2024.
“It’s interesting if you look through what the electronic distribution platform operators are required to report in this first iteration of the reporting requirements. It's not just how much income each person derives, it's actually things like their ABN, first and last names, date of birth, residential address, email and bank account details. It's quite comprehensive,” said Mr Pover.
In terms of financial information, electronic distribution platform operators will be required to report a range of things for each entity or seller including industry type, the level of transactions in a quarter and GST amounts for each quarter.
“The comprehensiveness of the reporting suggests that the ATO is not just going to be checking income tax obligations, but also GST obligations,” said Mr Pover.
Where an electronic distribution platform is also facilitating the supply of short-term accommodation, such as Airbnb for example, the operator will be required to report the property name, the property address and the actual number of nights that it was booked out.
“That goes towards the ATO checking things like the main residence exemption and other capital gains tax related matters,” said Mr Pover.
“For example, if someone who lives in Sydney goes away for a month overseas and rents out their apartment on Airbnb and perhaps either doesn't report the income, or two, they then go to sell that property and claim the main residence exemption, the ATO may question this given the data reported by Airbnb.”
Mr Pover said similarities can be drawn between this reporting regime and what financial institutions and companies are required to report to the ATO in respect to interest and dividends derived by taxpayers.
“I can foresee a time in the future where this reporting regime will allow the ATO to pre-fill the taxpayers tax return with the income that they derived from renting out their property or operating a ride share service for example,” he said.
The ATO has said that electronic distribution operators will need to have appropriate systems and procedures in place to ensure the information they include in their reports is correct.
Operators that provide late or incorrect information may be hit with penalties under the new regime.
“EDPs must take reasonable care to collect the required information from sellers, ensure seller information is recorded correctly and updated as needed and correct errors when they are identified,” the ATO said.
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