TABLE OF CONTENTS INTRODUCTION...........................................................................................................................1 (a) probability ensuring that shared economy service providers complying with the Australian income tax laws...........................................................................................................................1 (b) Ways to improve the compliance.........................................................................................5 CONCLUSION................................................................................................................................7 REFERENCES................................................................................................................................8
INTRODUCTION A tax is the charges on the income of an individual or business or trust or charity and is charged by the government of thecountry where the business is running and situated. The aim of charging the tax is earning the profit orrevenue which can be further used by the government for welfare of the public and nation. Applicationof tax on the shared economy services providers by thegovernment and Australian taxation authority of Australia. This study will explain about the different section and guideline which are required to understand for doing businesseffectively. The shared economy is also called as the peer to peer economywhich is made of the consumptionwhere goods or servicesnot owned by the single user but instead only on temporarily used by the members of the network and underutilized assets are shared for free or for charging by fee(Wenzel, 2019) (a) probability ensuring that shared economy service providers complying with the Australian income tax laws. Two shared economy provider from the project .Uber and Airbnb is taken as the shared economy service providers in the report which is on this peer to peer transaction are empowered by the digital platform and tee end user who generally representing the demand side of the transaction aregot matched by these shared economies emwithin the onlineplatform. The users generally paying for the services provided by these platforms by allowing asset percentage of transaction value to be held by the platform provider as a fee or commission. The shared economies have gained important share of market in the accommodating that is short term letting , passenger transport, household services , professional and technical services and collaborative financial sectors, say for example Airbnb is considering to be the largest services provider of accommodation in the world(Stephenson and Vracheva, 2015). It is argued that the growth of shared economy are generally drived by the cost advantage as it gives the base with the flexibility which is been provided to the suppliers ad users of the services. Its growth is also required to fuelled by any jurisdictions impose importantly and low legal needs which includes of for taxes, on the sharing economy users. the another important issue which considers for sharing economy is eve there are precautionary measures for the 1
sharing economies to stay in the domainbut the taxes are applicable to their activities which may earn lower revenues and at the same time it distort the level playing field(Sigala, 2018). sharing economy was worth around $15.1 billion in 2017 and 10.8 millions Australian or 60% of the employees and staff were thinking to have extra money from sharing economy services. Federal government even have no estimate of the tax lost from the potential under- reporting of income for avoiding the tax payment(Top 10 Tax Tips for the Australian Sharing Economy,2017). The ATO has declared a law focusing on the tax affairs for those who work in the sharing economy(Richardson, 2016). There are many of Australians offering services through companies like Uber, Intertask etc. Many people do not understand that sharing economy work is taxable and for filling upthe knowledge gap there are some important heads which needs to be understand carefully and effectively. Operating and recording of their income and expenses Income need to declared on the tax return Income which is received by these organisations from working in the sharing economy is completely responsible for paying tax and need to be declared on their tax return. Claim deductions These organisations are claiming for the deductions for any of the expenses which is related to the work or the part of their work and must be declared on the tax return. Uber driver most of the expenditures they likely to focus is on the costs of the purchase and using their vehicles or taxies(Kupriyanovsky and et.al., 2017). Then they are required to keeping a log book of their journey over a 12 week period so that they able to work on the business and personal spot and also keep a log of all the journeys including the travel to and from pick ups. Keeping receipts also so that substantiate cots like fuels, car cleaning, servicing, etc. In the case of the Airbnb if they rent out a room than they can able to claim for the appropriate proportion of the property related expenses which includes rates, cleaning, heating ,, cable TV subscriptions, lighting, water charges etc. Fees or commissions could be tax deductible 2
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Most of the sharing economy services charge fee or commission out of the price which they charge from the customers for offering their services to them(Fauziatiand et.al., 2016) . The fee or commission charged by them is tax deductible. Only claim the business related elements The expenses which are claimed by these organisations are mixture of the business and private or domestic use but companies need to make sure that only business use expenses can be claimed by them not the domestic ones. Capital gains tax exemptions for the Airbnbers if they are renting out the part of their home through Airbnb than they might lose the part of the capital gains tax exemptions which typically applied to their main residence. This means they need to pay the capital gain tax bills if they sell their house. Uber drivers register for GST and claim the GST credits it is the duty for theuber driver to get register themselves forthe GST wit the ATO and also charge GST on all of their fares from the first dollar(Emery, 2016). They can also claim for their work related expenses and purchases. They are need to submit a BAS from every quarter. Airbnb register for the GST of turnover exceeds $75000 Airbnb also need to register for the GST ifturnover from the shared economy business combined with any business they run exceeds to $75000 Disclosure of the income Australian Taxation office (ATO) is in contact with all the providers of sharing economy servicesalso knows that who operates through those services . If these organisations fails to disclose their income from the sharing economy work than also ATO will know about it. According to the Income tax assessment Act 1997, section 900-165 the period of retention says that when they are required to retain the record of expenses under the division or the division 28 they have to to retain the records for 5 years(Dealeand Crawford, 2018). The payment which received by the organisation through theproviders of sharing economy which are assessable income are subjected to the income tax which means they need to 3
declare the income in their tax return and could claim for the deductions for businessassociate expenses. Assessment incomer generally includes : The income recieved from providingservices forfee whichinvolve riding sourcing, delivering food , providing other serviceswhich are arranged through sharing economic platform. recieving the short term rentor long term rent from a property or anypart of the property that they own on the lease such as theira rental property, home, or any parking space(Braithwaite and Reinhart, 2019). Income generating by sharing of any other forms the property as the motor vehicle or car or a van,. Incomewhichisreceivedfromcontinuingandcarryingonbusinessarrangedor facilitated through sharing economy platform. Organisations required to maintain the all records of the income and expenses irrespective of how much they are earning. According to the Income tax Assessment act 1936- Section 262 As it is required for all the sharing economy service providers to maintain the record of all the transactions and other acts engaged in by the person that are relevant for any of the purpose of this Act (Allen,Murphy and Bates, 2017). If they not keeping the records as required by the section of than there is administrative penalty . GST Under $75000 If the turnover of the companies are underthe GST threshold of $75000 per year than they are need not register for the GST. However, they may apply for the ABN. At or over $75000 If the turnover is or estimated to be $75000 or greater per year than they required to get an ABN and register for the GST(Ali,2017). Already register for the GST 4
if the company isregistered already for the GST for any of the reason than they get income providing products and services throughsharing collectively and they also need to maintain account for the GST on earnings through the existing ABN and GST registration this includes if it is from the Another enterprises and other sharing economy skills(Wenzel, 2019). Say for example if any company makeregisteration for the GST as they haveride sourcing enterprise than they also need to account for the GST on goods or services they provide through any other firm they carry on such a rent out a car or the parking space. GST on the service fees or commissions the services provided by the GST registered facilitator are subjected to GST when they are providing : Within Australia or through an Australian business They could generally claim the GST credit for the GST they pay on the service fee or commissions if they are registered for the GST(Sigala, 2018). Wholly or partly from outside theAustraliaif the company have not provided the facilitator to the ABN and declaration that their GST registered the facilitator must assume that they are not registered fir the GST and will apply for the GST. They can't claim for the GST credit for the GST that need to pay on service fees or commissions if they not registered for the GST. (b) Ways to improve the compliance The sharing economy providers are meeting bit income tax obligations but there is requirement for improving the compliance in order to effectively fulfilthe obligations of Australian income tax department and offices(Emery, 2016). There are different ways which can be helpful in improving the taxation by sharingproviders of economy servicewhich might includes the following suggestions which ca be used for fixing the Australian tax system. Uber have been accused of the wage theft by other drivers as they claim that Uber have deceived for taking the pay cuts under the recently changed policy. The important change which Uber gives is that customers with more certainty by quoting that exact upfront price say $45 instead of a range between 40-50. May Uber drivers claimed that there is severe drop in the earnings as they are getting small change almost on each trip which reflects that Uber is not 5
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disclosing their actual income which is against the tax laws and indicating that they are not complying with the Australian tax laws. Working of the GST and what they involved general bargain: shared income tax and GST equally Thebargain isa dynamic process and also remain the dynamic but it can be set back the parts of the institutional framework to improve it. The suggestion is that sharing income and GSTrevenue equally between thegovernment and the states, by replacingother grants of the government. A new governmental agreement is required and both the government that is federal and state government will have hold on the future tax for both the income tax and the GST(Stephenson and Vracheva,2015). This will help in providing the clear budgetforstates in addition with higher revenue and this revenue will be equalised across the country. Fixing the GST and company tax-related this is considered to be one of the most important factors for sustainability and prosperity of budget Fixing the GSTby expanding the base and it is the main aim to raise the revenue and GST is considerer to be an important factor in the entire system of tax. It also covering the digital downloads and e- commerce they are also applying the GST on the health, water and education, other financial services(Kupriyanovsky and et.al., 2017). Australia requiresto set clean and clear path on company tax in the future . This cost revenue and it need be the fulfilled by company tax and tighten the enforcement cooperatively with the different countries of the world. Australian taxation needs to made clear and efficient investigation in context of all the sharing economy providers with the help of the Australian taxation office (ATO) as they help the government to know forthe providers of sharing economy and who are operating under these services who helpsto ascertain the actual report of the providers on time and wil get to know about al the expenses and income of the companies. The proper and legal deduction can be claimed by these providers on expenses which are associated with the business or business related activities and government needs to provide these deductions in order to run and carry effective and legislative law. 6
By improving the guidelines Australian tax office can impose the mandatory restriction on the economy shared providers so that they fulfil all their liabilities regarding the tax and their duties. CONCLUSION The above report concluded that implying of the tax by tax authorities is essential for entire economy and it is the responsibilityof all the individual, businessand shared economy providers to pay the tax which ischarged on their earning. From the above report it can be concluded that Australian tax laws are required to comply by the service providers in order to operate on a legal path and also some ways tomake improvement inthe legal compliance in order to meet the obligations towards the Australian income tax laws. 7
REFERENCES Books and Journals Ali, Z. A., 2017.The relationship between efforts for tax learning, awareness of tax laws, understanding of tax laws and tax compliance behaviour among salaried taxpayers in Mogadishu-Somalia(Doctoral dissertation, Universiti Utara Malaysia). Allen, S., Murphy, K. and Bates, L., 2017. What drives compliance? The effect of deterrence and shame emotions on young drivers’ compliance with road laws.Policing and society,27(8), pp.884-898. Braithwaite, V. and Reinhart, M., 2019.The Taxpayers' Charter: Does the Australian Tax Office comply and who benefits?. Centre for Tax System Integrity (CTSI), Research School of Social Sciences, The Australian National University. Deale,C.S.andCrawford,A.,2018.Providers’perceptionsoftheonlinecommunity marketplaceforlodgingaccommodations.TourismandHospitalityResearch,18(4). pp.470-477. Emery, J., 2016. Decoding the regulatory enigma: how Australian regulators should respond to the tax challenges presented by Bitcoin.Tax and Transfer Policy Institute Working Paper- 1/2016. Fauziati, P and et.al., 2016. The impact of tax knowledge on tax compliance case study in kota padang,Indonesia.JournalofAdvancedResearchinBusinessandManagement Studies.2(1). pp.22-30. Kupriyanovsky and et.al., 2017. Digital supply chains and blockchain-based technologies in a shared economy.International Journal of Open Information Technologies . 5(8). pp.80-95. Richardson, G., 2016. The determinants of tax evasion: A cross-country study. InFinancial crimes: psychological, technological, and ethical issues(pp. 33-57). Springer, Cham. Sigala, M., 2018. Market formation in the sharing economy: Findings and implications from the sub-economies of Airbnb. InSocial dynamics in a systems perspective. (pp. 159-174). Springer, Cham. 8
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Stephenson, D. and Vracheva, V., 2015. Corporate social responsibility and tax avoidance: A literature review and directions for future research.Available at SSRN 2756640. Wenzel, M., 2019.Misperceptions of social norms about tax compliance (2): A field experiment. CentreforTaxSystemIntegrity(CTSI),ResearchSchoolofSocialSciences,The Australian National University. Online Top 10 Tax Tips for the Australian Sharing Economy.2017[Online]. Available through <https://sbssa.com.au/top-10-tax-tips-for-the-australian-sharing-economy/>. ATO hunts hidden income from Uber, Airbnb and other gig economy workers.2019[Online]. Availablethrough<https://www.abc.net.au/news/2019-05-07/israel-folau-breached-code- of-conduct-hearing-finds/11089234>. 9