ATO to ‘swoop’ on the internet-based businesses – Part 7
Most businesses depend on the Internet in one way or another. Most commonly, the Internet is used to facilitate business transactions and to connect buyers with sellers. In recent times, the use of the Internet for business purposes has exploded with more people finding innovative ways to use the Internet to make money including, for example, the following growth industries:
- The sharing economy. According to the ATO, this refers to a new way of connecting buyers (‘users’) with sellers (‘providers’) to facilitate the provision of various services. Two big players in the sharing economy are Airbnb (accommodation) and Uber (a ‘ride sharing’).
- People generating income from YouTube. For example, a client may become a YouTube sensation by posting videos about pretty much anything, from make-up tutorials to gaming commentary to cooking classes.
- People generating income from ‘selling’ (or licensing) apps (the term ‘app’ is short for ‘application’ and is defined in these notes as a software program for use on the mobile devices-refer below). For example, a client may have an idea for a new game, or an ‘app’ that may be profitable when used in conjunction with an existing business.
In many ways, the rapid growth in these new industries has left the ATO and other regulators scrambling to catch-up. For instance, there are continuing concerns about the legality of Uber in some States/Territories and, from a tax perspective; the ATO has become increasingly concerned that participants in these industries may escape taxation.
The purpose of these notes is to take a closer a look at the above-mentioned industries with a view to providing guidance in relation to the taxation implications of such arrangement (e.g., income tax, CGT, GST). Unfortunately, in many cases, the nature of the income derived in relation to these activities is dependent on the contractual arrangement between the parties (which can differ markedly from one taxpayer to the next, even when both are involved in the same industry). As such, in some cases, the analysis provided is more general in nature.
ATO to put Uber drivers under the audit microscope
Uber is a technology based ‘ride-sourcing’ business that matches drivers with passengers. The drives are paid for driving and passengers benefit by obtaining a timely ride (and generally for less than the cost of a taxi).
It’s important that financial reports provided by Uber data match to your tax returns and activity statements.