Assessing Tax Compliance of Shared Economy Providers in Australia

This essay examines the degree to which shared economy providers in Australia, such as Uber drivers, Airbnb hosts, and Airtasker workers, comply with Australian income tax laws. It explores the challenges and complexities of ensuring compliance, including the rapid growth of the sharing economy, the use of technology, and the potential for tax avoidance. The essay analyzes the current landscape, including the government's efforts to monitor and regulate income reporting, and the implementation of new reporting regimes. It then discusses various factors that influence compliance, such as pre-filled tax returns, concerns about data privacy, and the economic impact on gig economy users. Furthermore, the essay proposes ways to improve tax compliance, including economic and behavioral approaches such as reduced tax rates, automated systems, and enhanced educational guidance. It emphasizes the importance of a comprehensive approach that considers both the economic and behavioral aspects of tax compliance to promote a fair and efficient tax system. The conclusion highlights the potential effectiveness of these approaches in fostering higher rates of tax compliance and ensuring that all participants in the sharing economy meet their tax obligations.

Running Head: Essay Assessment Assignment 1
ESSAY ASSESSMENT ASSIGNMENT
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Essay Assessment Assignment 2
Shared economy providers in Australia and income tax compliance laws
Introduction
The term sharing economy is a concept that brings to light the capacity and the choice of
people to hire or borrow goods in advance instead of buying them (Kim, Yoon, & Zo, 2015). It is
also referred to as peer-to-peer-based sharing or collaborative consumption. It allows people to
monetize assets that aren't being completely used and also the underutilized assets including
huge goods, vehicles, and homes, products along with gear, toys, and apparel. Traditionally, only
newspapers or the word of the mouth was used to circulate the information about shared
economy commodities. After the technology growth, pervasive computing and the benefit of
mobile payments through certain money applications (m-payments), the systems for locating the
sharing economy assets became much easier.
Development of a wide variety of cellular and online systems would successfully connect
people who have underutilized belongings with folks that need to utilize the property. This made
it possible for a wide selling of the goods and deliverance of services on time. The sharing
economy is basically two-sided such that there must be a consumer and the provider of the goods
or services (Stephany, 2015). The online communication and development of technology allow
the clients to order the companies for what they want.
In Australia, this idea was adopted by the mass and it runs smoothly because of its fast
growth by the widespread use of services including; Uber used for ridesharing, Deliveroo for
deliveries, MadPaws babysitting pets, Car-next-door and Go-get used for car sharing, Airbnb
used for lodging services and accommodation sharing, Airtasker and HiPages for micro-jobs
offering, Spacer for Self-storage among many others (Frenken, & Schor, 2017). The estimated
worth of this shared economy was $15.1 billion in 2017. 60% of the Australian workforce was

Essay Assessment Assignment 3
believed to have earned more cash from sharing economy between July and December 2017.
This is termed by the Federal Government as tax avoidance method hence they don't have the
record of the number of tax losses from the underreported income earnings. Because of the rapid
growth of this economy, the Treasury suggests that this information should be reported because
all the third parties do(Böhme, Christin, Edelman, & Moore, 2015).
New reporting regime implementation. All the economy providers on the sharing
economy would be required to comply with the new way of reporting their earnings to the
Australian Taxation Office (Beretta, 2017). This is in accordance with a recommendation from
the Federal Government's Black Economy Taskforce which also highlighted stronger rules to
fight against the criminal activities and tax avoidance activities.
Possibility and viability degree to which shared economy providers comply with Australian
income tax laws
Pre-filled tax returns for shared economy income. This initiation would lead to a
mandatory system of tax filling which would ensure compliance. Millions of Australians would
use the digital system to ensure that their files have been prefilled hence avoiding onerous
duties(Warren, 2016). The shared economy groups including Uber and Airbnb in conjunction
with the Australian Taxation Office would directly reporting of the income earned through Uber
drivers and those supplying rental services underneath the ATO’s formal data-collection powers
(Brown, Anderson, & Morrison, 2011). This method would work because of the response of the
spokesmen of the concerned economy sharing which was positive. The new reporting method
would lead to many more people pre-filling the tax returns. The new providers of the sharing

Essay Assessment Assignment 4
economy will be given a grace period before the regime reporting starts, this is to allow them to
grow and link with consumers.
The argument that gig economy users earn low wages. Some economist argued that the
users of the gig economy would be under a heavy burden like for instance those who use rent a
room of their retirement home to supplement their income (Schor, 2016). The economist
basically said it's logical that it would not be a heavy compliance burden on the sharing economy
platforms provider but it is hurting them. The government would be going after multinationals
and not individuals because this would be a burden to the lowly earning individual providers.
The Uber drivers, for instance, earn below the minimum statutory wage per hour. Therefore, it
was argued that the treasury should begin by closing all the corporate tax loopholes instead of
going after profits from micro-trades of lowly paid workers (Tesco, 2014). This would lead to a
lower degree of compliance.
The concerns about shared data privacy. As per the co-founder of the air tasker, it's clear
that every individual is responsible to meet their own tax obligations without the data being
shared between the platforms and the purchasers (Chen, & Zhao, 2012). Sharing of this
information can lead to privacy issues of Australians and this can be blamed on the government
because it is its responsibility to keep high levels of secrecy of the taxpayers. This might lead to
uneven levels of playing ground for both the home and foreign platform operator. The
government treasury suggested another methodology of accessing the bank transactions which
might lead to low-quality data and hence some people evading the tax compliance laws.
Technology giants are using apps to directly report the amount earned by uber and the Airbnb to
ATO but the process is really time-consuming and hence the degree of compliance is really low.

Essay Assessment Assignment 5
The future plan of withholding income from users. Goods and Services Tax (GST)
registration special policies making use of particular companies and industries, the Australian
Taxation Office has undertaken focused compliance activities within the shared economy system
whereby the use of the GST registrations drivers involved in ride-sourcing activities (Brauner, &
Baez, 2015). The Federal Black Market Taskforce would be forced to deduct earnings tax from
bills made to the sellers and remit it to ATO from those dodging taxes. This is aimed at reduction
of the tax avoidance technique used by the sharing economy providers. It is a tedious process of
follow up because it might burden the consumers of the sharing economy hence in return the
providers fail to observe it. This also reduces the degree of tax compliance.
Ways to improve tax compliance in Australia by shared economy providers
There are several ways of improving the Australian income compliance which does not
affect the providers and the users by several negative impacts. Negative effects include; tax
overpayments, separation of taxpayers from the liability, revealing of privacy due to data sharing
between different platforms and complications on simpler tax codes due to filing everything
separately. These ways are divided into the economic and behavioral approach that is the
improvement of pre-filled tax returns for shared economy income and provision of more
guidance education on the importance of tax compliance respectively.
Improvement of pre-filled tax returns for shared economy income (economic approach).
This kind of reporting regime will encompass the main missed attributes in the earlier system to
solve their own inflamed problems which will lead to all the people complying with the tax rules.
The improvements will include:

Essay Assessment Assignment 6
Reduced tax rates for all the sharing economy providers (Puschmann, & Alt, 2016).
These areas include the taxation of peer-to-peer marketplaces, sales activities from exchange
platforms because no profit obtained, business to consumer service and business to business and
collaborative financial activities and this will relief the feeling of overpayment.
Only one firm should be in charge of handling the information from the Australian government
(Choo, 2011). This will seize the fear of shared data privacy and this will enable the people to be
more willing to register with the system and do their responsibility which is meet their own tax
obligation without exposure of privacy and thus the government responsibility of privacy to its
taxpayers.
Automated system innovation for all the sharing economy users and providers(Maglia, &
Spohrer, 2013). This reduces the burden of cutting directly levies from innocent consumers and
this will also ensure that transactions collected to be prefilled are not under the preferred quality
hence solving the problem of tax avoidance.
The government involvement in the recommendation of only registered shared economy
providers to run the businesses or hobby. Federal Black Market Taskforce to instill law
enforcement to those operating without registration (Cook, 2017).Tax avoidance and
underpayment of tax are unfair means to those responsible people who meet their obligation of
tax returns and payments. The sharing economy clients and groups should be held responsible
for this action in accordance with the well-laid laws.
Making sure all the internet businesses are all under the regulatory laws by the
Federation. All the new businesses on the internet thrive perfectly bringing cheap and better
services under Australians. When the authorities have all the internet-based businesses regulated
the potential gains are really high without strangling their thriving growth.

Essay Assessment Assignment 7
Well described insurance cover and protection from the competition. In technology, the main
sharing economy providers such as Uber, Airbnb, Freelancers are highly investing their money
in order to get profit (Angkinand, & Wihlborg, 2010). The government should make sure that all
the ride-sharing or car-sharing providers and users are all well covered by advance insurances all
through from a portion of the tax they pay so that they don’t incur more hurting losses when they
face accidents. This acts as a motivating factor to those providing the sharing economy and will
lead to self-compliance.
Provision of more guidance education on the importance of tax compliance from the
shared economy by both providers and users (behavioral approach): Imposition and
implementation of difficult reporting and advance data-matching regime without the need
education guidance and improvement is like a waste of time and does not really solve the
nightmare of hoe the gig economy providers can be assisted to keep a clean record of their yearly
income earnings to meet the personal responsibility of tax compliance to the ATO (von Dietze,
& Allgrove, 2014).
Guidance education creates awareness to those providing sharing economy. It's crucial to
provide the consumers that are the users of these services with the correct information (Dodgson,
Hughes, Foster, & Metcalfe, 2011). This is only done excellently by the provision of information
portals with the rights and obligations in the sharing economy. For instance, some of the services
offered by Uber and Taxi are not yet clear hence not well illustrated when to prefill their taxes.
Encouraging self-compliance; when the regime is imposed then some education is needed
both to the imposters and also those it is applied on (Rawlings, 2012). When Australia
implements the regime then it should adopt the OECD definition to know what constitutes the
gig economy by which this helps by ensuring that Australia is not implementing laws basing on

Essay Assessment Assignment 8
unique definitions or concepts. After the education, the government will be aiming at imposing a
fit-for-purpose compliance experience which automatically promotes and encourages self-
compliance. This kind of understanding of concepts is preferred when placing the regulatory
laws and makes sure that it does not burden the participants.
Conclusion
In conclusion, the new regime reporting method of all the sharing economy providers to
the ATO can be really effective only with a few changes. The two economic and behavioral
approaches are aimed at an encouraged and higher percentage of taxation compliance or even
self-compliance (Le, Jensen, Shukla, & Biletska, 2016). The taxation compliance is important to
a nation because it ensures that there is equality to all the people without negligence and tax
avoidance which costs the nation a very big percentage of revenue which can be channeled to
more developmental growth. Counsel and direction, and a correspondence procedure to raise
network consciousness of duty commitments related to sharing economy support. The data
reporting routine should be actualized from an entire government viewpoint so data is accounted
for once and utilized fundamentally. The administration should lead further consult on
alternatives to streamline the duty results on the transfer of benefits used to deliver little
measures of salary.

Essay Assessment Assignment 9
References
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Essay Assessment Assignment 10
Dodgson, M., Hughes, A., Foster, J., & Metcalfe, S. (2011). Systems thinking, market failure,
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Essay Assessment Assignment 11
Warren, N. (2016). E-filing and compliance risk: Evidence from Australian personal income tax
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