Taxation Law

Running head: TAXATION LAW
Taxation Law
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TAXATION LAW1
Table of Contents
Introduction:...............................................................................................................................2
Current arrangements and promoting compliance with Australian income tax laws:...............3
Recommended ways of improving tax obligations:...................................................................5
Conclusion:................................................................................................................................7
References:.................................................................................................................................9

TAXATION LAW2
Introduction:
The business model of sharing economy such as Uber and AirBnB gives rise to
numerous social, economic and legal issues. With the continuous growth of this economy in
terms of size and market share, there is a simultaneous increase in the pressure of government
to address the issues of tax compliance to redress the rising distortion in taxation (ABC
News, 2019). Sharing economy does not have any definition that is universally accepted and
there are several terms that is used to refer under the numerous types of activities of sharing
economy. This is commonly known as collaborative economy or gig economy. The users
under the sharing economy platform pay for the services that are provided by the operators
and allows a set percentage of the value of transactions to be withheld by the operators of
sharing economy platform in the form of fee or commission.
In the recent years the sharing economy has attained a significant amount of growth
and has facilitated innovation, growth in employment and wide range of choice for the
customers (Braithwaite, 2017). During the consultation, the taskforce explained that the
sharing economy provides such as Uber and AirBnB give rise to a wide range of increasing
risks that the sellers might be paying the correct sum of tax. The probable underreporting of
tax dents the benefits of the sharing economy to the customers and business which ultimately
creates an unfair field for those that are doing the correct thing.
An arrangement with the of the platform operators has been entered by the ATO to
offer information under the current information gathering schemes. The collection of data
under the ride source section has permitted the ATO to adopt preventive measures that would
help the drivers to understand and comply with their taxation obligations (Li, 2015).
However, there is a need for more comprehensive regime so that tax compliance in this area
can be widely improved.

TAXATION LAW3
Current arrangements and promoting compliance with Australian income tax laws:
Presently, the sharing economy does not have sufficient information and transparency
in respect of matters related to taxation. As a result of this the ATO faces difficulty in
understanding if the sellers are understating their earnings, either purposely or because of the
insufficient awareness among them (Bornman & Wassermann, 2018). During the
consultation the taskforce has regularly cited that the main root cause to the problem is the
lack of awareness among them.
The main reason for the lack of awareness among the sellers in the sharing economy
is that they are not working under the outmoded work system, rather they are working as the
independent contractor and with self-employment ideologies that outside the contemporary
regimes of reporting (Bellin, 2017). This implies that the tax might not be withheld from the
earnings that is generated on the sharing economy platform as the sellers under this platform
does not has the requirement of reporting the data on the payments which is made to the
ATO.
As sharing economy has very informal nature, it is less probable that the sellers would
understand how such kind of activities might create an impact on the tax position. The sellers
such as Uber and AirBnB under the sharing economy might wrongly interpret that the income
that is made by them by conducting the sharing economy is not-taxable in the short term
(Beretta, 2017). If the sellers under the sharing economy does not understand their obligation,
then it will be difficult for the ATO to comply with the tax obligations.
In light of the above discussion, the ATO has restricted the information of the sellers
that are operating under the sharing economy (Sigala, 2018). The ATO considers that the
wide transparency gap due to the unfamiliarity of the sellers cannot be considered as the
desirable outcome. As Australia is having the self-assessment taxation system, it is important