Sharing is caring but what does it mean for tax?

Sharing is the new fad. Whether it’s ride sharing (Uber), house sharing (Airbnb) or odd job sharing (Airtasker) our society is clambering to find and provide more efficient and cheaper ways to make life easier. So far, it seems very successful! These apps/websites are becoming more and more popular and certainly creating some competition for the traditional taxi drivers, hotels and Jim’s mowing franchises.

While this is an awesome opportunity, anyone who provides these services still needs to consider how GST and income tax apply to their earnings.

If you are registered for GST because you already have a business enterprise you must account for GST on all the sharing services you provide that are subject to GST.

If you are providing services across multiple websites or apps, or through other enterprises outside of the sharing economy, you need to get an ABN and register for GST when your total turnover for all of your activities together is, or is expected to be, $75,000 or more per year.

Any income will also need to be tracked and declared at tax time as income tax still applies to earnings made using the sharing economy. 

For more info please visit the ATO website

Simpler BAS reporting making life easier

We have some good news for your BAS reporting! As of the current financial year, the ATO has introduced a simplified reporting system for your GST. This new system requires less detailed reporting and will save you time.

From 1 July 2017 entities with an annual turnover of less than $10million will be able to report using the new BAS system. The ATO will automatically transition you into the new simpler BAS reporting if you are eligible and your accounting software provider will provide you with instructions on how to set up bookkeeping for simpler BAS if available.

Under the new system, you will only need to report the following GST items each month or quarter in your BAS:

  • G1 – Total Sales
  • 1A – GST on Sales
  • 1B – GST on Purchases

If you lodge your activity statements via paper these may still include the following items but these can be left blank and are not required to be completed:

  • G2 – Export Sales
  • G3 – Other GST Free Sales
  • G10 – Capital Purchases
  • G11 – Non Capital Purchases

Digital currency – buying/exchanging and what it means for GST

Digital currency is high tech. It’s smart. It’s for those of us who really know how to make use of buying and selling in a modern, technical world. Digital currency, such as ‘bitcoin’ is an electronic asset used to make electronic purchases/exchanges. Until now, it has been recognised by the ATO as a CGT asset rather than a traditional ‘money’ asset. Additionally the buying and selling of digital currency have been subject to GST. So, those of us who are tech savvy enough to be making use of digital currency would unfortunately be required to pay GST twice; once to purchase the digital currency, and once again for the payment of goods and services subject to GST (eg those within Australia).

To remove this inconsistency, draft legislation has been released in an attempt to recognise digital currencies as money. If passed, this would mean that consumers who purchase goods and services with digital currency would no longer be required to pay GST twice.

ATO audits on the rise – how to safeguard the cost

Due to a rise in unpaid taxes in recent years, ATO audits have increased across Australia. Audits occur at random and can be a costly exercise. It can take a long time to gather the information required to prove that your lodgements are in fact thorough and honest. As a result, professional fees can add up. By taking out our audit shield service offering, you will be covered for the cost of our professional fees up to a prescribed limit which are incurred as part of the audit. Our provider, Audit Shield provides a comprehensive offering that has protected & assisted many of our clients throughout the investigation process.

If you would like to take up our service offering with Audit Shield, or have any questions about your existing coverage, please feel free to contact us to discuss your options.