Estimated reading time: 6 minutes
Key Takeaways
- Income earned through platforms like Uber, Airbnb, and Airtasker is taxable in Australia and the ATO treats it the same as any other income.
- Setting aside at least 30% of your share economy earnings can help you avoid a surprise tax bill.
- You may be able to claim deductions for expenses like car use and phone costs, but only if you keep good records.
- The ATO uses data-matching technology to cross-check platform income, so it pays to declare everything correctly.
Recent estimates suggest up to one in five Australians earn money through the share economy. They might drive for a ride sharing service, (e.g. Uber) rent out a spare room (e.g. Airbnb), deliver food, (e.g. DoorDash), complete odd jobs (e.g. Airtasker) or even provide professional services (e.g. Upwork).
What is the sharing economy?
The sharing economy is an online marketplace where people offer services through websites and apps. The most popular share economy platforms include businesses like Uber, Airtasker, Airbnb and DoorDash, but there are many more, offering everything from business services to tool sharing, car parking and pet care.
How is the share economy taxed in Australia?
The ATO treats share economy income exactly like any other income. Just like your wages or salary from any other job or business, money earned through the share economy is considered assessable income for tax purposes. The total amount you earn from both salary and wages plus share economy work determines which tax rate applies to you.
Example #1
Cal works at a bottle shop and earns $23,000 per year. He also drives part time for Uber and makes an additional $6,600 per year ($600 of which covers his GST obligations). Cal would then combine the $23,000 and $6,000 together to get a combined taxable income of $29,000. His tax obligations are then calculated on the combined $29,000.
How much of your share economy income should you save for tax?
We recommend setting aside at least 30% of any share economy income to cover what you owe at tax time. As we mentioned earlier, this income is considered taxable by the ATO. Unlike salaried employment, where tax is withheld from each pay, share economy income is paid to you in full and taxed later.
We commonly see clients who are in similar situations to Cal (see example #1). The average Australian tax rate is around 25%. Therefore, at tax time Cal would owe about $1,500 to cover his Uber income.
Don’t get caught out with a large bill at tax time. Ensure you’re saving some of your share economy income each week!
What types of share economy income are taxable?
If you drive for Uber, Uber Eats, DoorDash or a similar platform (e.g. ridesharing or food delivery), the income you earn as delivery or ridesharing fees is assessable income. You need to declare the amount you receive after the company takes their fee.
If you’re an Airbnb host, rent your property on Stayz or lend your car in a carsharing service in exchange for money, that income is also assessable for tax purposes. The same rules apply to niche platforms that allow users to rent out their caravans or boats.
Can you hide share economy income from the ATO?
The ATO and Government have rules that require all marketplaces operating in Australia to share their user data in order to maintain the fairness of the tax system.
This allows the ATO to verify that users of these platforms are declaring the correct income, using sophisticated data-matching techniques.
Share economy tax deductions
Tax deductions may be available to you depending on type of share economy income you earn.
Example #2
Kate has a part-time supermarket job but also works in the share economy to earn some extra money. Kate takes tutoring jobs she finds on Airtasker and delivers food for Uber Eats. She owns a car and uses her mobile phone to find the jobs and navigate when she is delivering.
Kate must include all the income she earns from her supermarket job, as well as from the tutoring and food delivery on her tax return. She can also claim deductions for certain car and mobile phone expenses, and the supplies she buys for tutoring.
So, if her mobile phone plan costs $80 per month (or $960 a year) and 40% of her phone use is work related, she can claim $384 (40%) as a deduction on her tax return.
She also tracks a total of 3,671 km driven when delivering Uber Eats, which she can claim at 88c per km. She can claim $0.88 x 3671km = $3,230 as a deduction on her return.
Record keeping
Whether it is related to income or deductions, keeping good records is essential when earning money through the share economy. A digital backup on a spreadsheet or Google Doc is advisable, as the ATO can ask you to produce records to prove what you earned and spent.
We can help
At Etax we have many in-house accountants who are experts on the share economy. If you need help registering for GST or an ABN, or you want to make sure your tax return is done right, get in touch at [email protected] and we’ll be happy to help!
Frequently asked questions about the share economy
Yes. The ATO taxes all share economy income, regardless of how much you earn or how many hours you work. Whether you drive for Uber, rent out a room on Airbnb, or complete jobs on Airtasker, you must declare that income on your annual tax return.
The ATO requires all platforms operating in Australia to share user data, and it uses data-matching technology to cross-check. If income is missing from your return, you may face penalties, interest charges, or a tax audit.
Yes, for most share economy work, you are operating as an independent contractor and need an ABN. This is particularly important if you earn above the GST threshold ($75,000 per year) or if the platform you work with requires one. An accountant can help you work out whether you need to register.
Common claims include vehicle expenses, mobile phone costs, and any work-related supplies or equipment. You can only claim the work-related percentage of any expense, so keeping good records is essential.
You add your share economy earnings to your other income, such as your salary or wages, and pay tax on them at your marginal rate. The average Australian tax rate is around 25–30%. Setting aside at least 30% of every share economy payment you receive will help ensure you can cover your potential tax bill.
You should keep records of all income and expenses you plan to claim as deductions. This includes payment summaries, receipts for work-related purchases, a clear log of kilometres driven, and records of phone usage. Digital records, such as a spreadsheet or a cloud document, are easy to maintain and produce if the ATO asks for them.
