Taxation Law: Sharing Economy vs Traditional Business Model

Running head: TAXATION LAW
Taxation Law
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TAXATION LAW1
Executive Summary:
The sharing economy is usually associated with the understanding of innovative business
models that has simply uprooted the traditional business, breaking down the industry
categories and making the optimum use of resources. The main issue is whether the sharing
economy activities carried out by agents are captured adequately under the tax system. The
insufficient sharing economy regulation forced by insufficient visibility of activities results in
reduced tax collection from end user and tax breaks to sharing economy platform contributes
to single-side competitive advantage on the counterparts under strictly regulated traditional
segments.

TAXATION LAW2
Table of Contents
Introduction:...............................................................................................................................3
The Black Economy:..................................................................................................................3
Sharing Economy:......................................................................................................................4
Sharing economy business model and traditional business model:...........................................5
Digital transportation business model (Uber):.......................................................................5
Traditional transportation system (Taxi)................................................................................6
Key differences between the two business models that effect taxation outcome:.....................6
Tax consequences under existing Australian tax law:...............................................................8
Conclusion:..............................................................................................................................10
References:...............................................................................................................................11

TAXATION LAW3
Introduction:
In the age of digitalization which resulted in higher advantage from internet
availability along with the accessibility of challenging information processing procedures for
making an online platforms that equals parties who are keen to enter into the sharing
transactions. The sharing economy business model has led to several social, economic and
legal concerns (Cohen & Kietzmann, 2014). As the economy is growing continuously and
increased amount of market share it adds pressure on government to address the issues of
increasing distortion however supporting the advanced invention also.
The main issue is whether the sharing economy activities carried out by agents are
captured adequately under the tax system. The insufficient sharing economy regulation forced
by insufficient visibility of activities results in reduced tax collection from end user and tax
breaks to sharing economy platform contributes to single-side competitive advantage on the
counterparts under strictly regulated traditional segments.
The report address the business model of sharing economy and traditional business
model by understanding the structures of each business operational functions. Differences
regarding the two business models will be addressed and possible effect on tax under the
present Australian tax laws.
The Black Economy:
Black economy is referred as individuals that are wholly operating out of tax and
controlling system or includes those to whom the authorities knows but they are not correctly
reporting their obligations associated to tax (Daunorienė et al., 2015). This involves all types
of practices along with payments and receipts relating to cash paid off the books, fraud
relating to welfare fund, sharing economy contractors not making disclosure of income,
pheonixing and working illegally. It take into account situations where employers