Taxation Law and the Sharing Economy

Running head: TAXATION LAW
Taxation Law
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1TAXATION LAW
Introduction:
There is no set definition regarding the sharing economy because there are several
expressions used to define the sharing economy. Sharing economy is better recognized as gig
economy. The sharing economy over the years has attained significant growth and has
facilitated growth in employment and innovation (Allen, 2015). In the recent article issued by
the black economy taskforce it has stressed the damage that black economy poses the trade
and society. It penalises the authentic taxpayers, undermines the tax honesty of Australia and
its wellbeing scheme which makes an asymmetrical playing ground for majority of the small
business that are doing things in the right manner. In the recent publication of taskforce, it has
discussed that with the rise in the sharing economy there is a rise in the hazards where sellers
might not be paying the right amount of tax (Hamari et al., 2016). The principal of sharing
economy weakens the advantage of sharing economy for the customers and businesses and
results in biased playing field for the persons doing things in the right manner.
An agreement has been formed by the ATO with certain platforms to provide
evidence under the present facts collection system. Collection of data under the ride obtaining
segment has enabled the ATO to assume defensive measures that aids the Uber drivers to
comprehend and obey with their obligations (Wang & Nicolau, 2017). Nevertheless, there is
a need for adopting the complete regimes to broadly improve the compliance under this part.
Existing preparations and encouraging compliance with Australian income tax laws:
Currently the information available is insufficient relating to transparency for matters
relating to tax under sharing economy (Stewart & Stanford, 2017). Consequently, the ATO
faces challenges in understanding whether the sellers are understating their revenue either
intentionally or due to the insufficient awareness. In the consultation procedure, the taskforce
has stated that the main cause of problem has regularly been the lack of awareness.

2TAXATION LAW
The primary cause for absence of consciousness is largely for the reason that the
sellers under sharing economy may not be following the traditional employer-employee
relationships rather they are working as the independent contractor or the principles of self-
employment that presently falls out of the reporting regimes (Cheng, 2016). This means that
tax may not be withheld from the business profits that is produced on the sharing economy
platform and the platform may not be under the requirement of reporting the facts on inflows
that is made to operators or to ATO.
The nature of sharing economy is very casual in nature and it is less probable that the
sellers will be able to understand how the activities of sharing economy may affect the tax
situation. The sellers operating under the sharing economy may incorrectly contemplate that
the profits derived from the activities of sharing economy are non-assessable in the short run
or occasionally and the do not pay tax (Findlay & Garnaut, 2017). If the sellers operating
under the sharing economy fails to recognize their accountability, then it turns out to be very
hard for the sellers to meet the terms of regulations.
With respect to aforesaid discussion, the ATO has limited the info relating to the
profits of sellers operating under sharing economy. Such transparency hole amongst the
sellers who are not acquainted with the income tax requirements cannot be treated as the
anticipated consequence. There are certain gaps in the present reporting regimes and cannot
be treated new because it constantly features during the short-term occupation arrangements
and provisions between the private individuals associated to the assets use (Hawlitschek et
al., 2016). Unlike the earlier decentralised reporting regimes, the role of centralised workers
signifies that it is very much possible to obtain information which is identical what was
previously gathered through the present reporting regimes. Identical to existing reporting
regimes, this will be helpful for the ATO to perform data matching of the income that is
reported from the business and individuals associated to the income that is reported from the