Do you need an ABN or pay tax in the Sharing Economy?  This post discusses the 20th May ATO Tax ruling on the Sharing Economy, as regards to GST, pet sitters inside PetHomeStay, our platform itself, and pet sitters and guests obligations.

Tax & GST Can be Confusing to People in the Sharing Economy!

The Australian Taxation Office issued guidelines yesterday on the treatment of GST as it relates to the Sharing Economy, in particular mentioning Uber & Airbnb.

NB - This is our take on how it affects Hosts on the PetHomeStay platform - we are not lawyers/accountants and the usual disclaimers apply! Or if you are a lawyer, let us know your view and we can tell our community!

In issuing the guidance, it should be noted that the ATO is not actually making any new laws, it is just reinforcing existing laws and applying them to specific new use cases. (New laws are being discussed by both sides of the political divide around the sharing economy, led by Andrew Leigh of Labour, and the ATO itself as part of the wider taxation of digital goods and services on overseas entities).

What's all the fuss?
The big hoo-ha statement was that the ATO have clarified that Uber is (for now) classified as a taxi service. Taxi Services are specifically named as being exempt from the $75k GST-free earnings threshold (more on that later), and so drivers have to pay GST on the first dollar they earn. And if drivers have to pay GST, they have to be registered for an ABN.

How do these guidelines affect pet sitting in particular?

Let's start at the top.

In Australia, if you receive any income from providing a good or a service, you are running an 'enterprise' (whether you have a business name, website, brand, ABN or not). This is as opposed to a 'hobby'.

(This is also important because this definition fundamentally affects insurances - your own personal insurance such as Home & Contents do not generally cover you if you are running an enterprise from home. That's why PetHomeStay has our unique Insurance specifically for Hosts!)

All your hard earned income (whether via PetHomeStay, Airbnb, Ebay profits or other peer to peer sites) will always need to be declared to the ATO and taxed according to normal income tax rules.

So nothing has changed from an overall income & declaration perspective at all.

What about GST?
Under current rules, there is a $75k threshold for an individual's enterprise earnings before registering for GST is required.

This includes all of your sharing economy activities combined together, not just earnings on PetHomeStay. So if you also do Airbnb rentals, it is the total of all these (and any other income generating investments).

The most prolific sitters on PetHomeStay will probably earn around $20k per year, if they are looking after multiple pets for every day of the year.

Once Bookings are complete, PetHomeStay pays GST on our 15% service fees to the ATO (we are proudly Australian unlike some other pet sitting websites).

Check out this example verbatim from the ATO website:-

Doing odd jobs
Karen is retired but she is an experienced gardener and people often ask her for advice about their gardens and have offered to pay her for her assistance.
A friend shows Karen a website where people ask for advice on garden care and will pay for the advice. Karen signs up, starts providing advice and getting paid. Over the course of a year she is paid about $10,000 for her advice.
While Karen might have an enterprise in providing garden advice, the amount she received is under the $75,000 threshold and so she is not required to register for GST.
The $10,000 is part of Karen's income and she includes it in her tax return along with other income from her investments. She can also claim a deduction for the fees that the facilitator charged her.

Can I claim deductions on the PetHomeStay Service Charges?
Yes! You can claim a deduction on the service charges that PetHomeStay has applied to your Host Payout.

Do I need an ABN?
It is not mandatory to have an ABN for PetHomeStay, however if you want to claim GST back you will need to have one for your own personal use.

Do I need a tax file number?

Chances are you have one already. People need one of these to work in Australia, provide a tax return, and claim any deductions. PetHomeStay doesn't need to see your tax file number as we are an agent for you, not your employer.