The Sharing Economy and Tax

If you let out a room or a car-parking space, do odd jobs etc. for payment or drive passengers in a car for a fare, you may have tax obligations. The ‘sharing economy’ – aka collaborative consumption, peer-to-peer or the like – is a new way of connecting buyers (‘users’) and sellers (‘providers’). Sharing economy arrangements are generally booked through a facilitator using a website or app.

    Common examples of what providers do in some sharing economy services include:
  • Renting out or letting car-parking space
  • Providing odd jobs, errands, deliveries or more skilled services on an ad hoc basis, or
  • Using a car to transport members of the public for a fare.
  • Renting out or subleasing a room or other property for accommodation

Subleasing office space has become increasingly popular to small businesses due to factors such as company restructuring and downsizing, which can make subleasing an attractive alternative to writing off the costs of vacant space. However subleasing can become more complicated than direct leasing. There are advantages and disadvantages of subleasing and the decision can be contingent on other factors such as:

  • The availability of sublease space or direct office space in the area that you are looking in.
  • The lease terms and conditions.
  • Whether you are looking for a short or long term lease.
  • How much each lease arrangement will end up costing you.

The tax laws that apply to conventional business activity also apply to sharing-economy activities. In some instances, letting out a room, letting out a parking space, doing odd jobs or other activities for payment will mean that you are earning assessable income, regardless of whether you are carrying on a business.

If you are earning assessable income from providing sharing-economy services, you will need to keep records of income from that activity, and any allowable deductions, which may need to be apportioned for private use.

To arrange a meeting with one of our business advisors, or to find out more about the emerging share economy, please call 08 9791 2666 or email admin@sbcbw.asn.au.