The sharing economy is such a hot topic right now. Think Airbnb, Uber and Airtasker.
If you bring in income via the sharing economy you might be disappointed to learn that tax rules apply to the sharing economy just like they do to the rest of the economy.
The Federal Court of Australia has handed down its decision that ride-sourcing is taxi travel. For GST purposes, the word taxi means a car (vehicle) made available for public hire that is used to transport passengers for fares. Don’t be caught out thinking that you earn less than the current GST registration threshold of $75,000 – it doesn’t apply to ride-sourcing enterprises!
In Australia, if you operate a ride-sourcing enterprise you are required to:
have an Australian business number (ABN)
register for GST, regardless of how much you earn
pay GST on the full fare received from passengers for each trip you provide
lodge activity statements
include income from ride-sourcing in your income tax returns.
Not sure if what you are doing is considered running a ride-sourcing enterprise? Australian Taxation Office website provides more information:
If you are registered for GST in Australia, then you would be familiar with a little old thing called the Business Activity Statement (BAS). No doubt you have also spent many an hour researching the ATO website trying to figure out one thing or another in order to get your BAS completed and lodged in time. Unless, of course, you have a trusted BAS Agent to take this time-consuming task off your hands.
Here are a few tips for preparing and lodging your BAS that will hopefully save you a bit of time and stress.
If you are due a refund on your next Business Activity Statement, you must make sure any outstanding BAS have been lodged. Why? Because the ATO won’t pay your refund until they know the full story regarding your GST payable or refundable.
A lot of businesses sell gift vouchers. You may not be aware that you don’t claim GST collected at the time of selling the gift voucher unless the voucher is for a specific product or service. For example, if I run a hairdressing salon and sell gift vouchers than can be redeemed for anything in the salon then I don’t claim the GST on the sale until the recipient of the voucher comes in and uses the voucher. This is one of my favourite pieces of GST legislation I’ve come across. (Okay, don’t judge me).
Registered for GST and you sell food? It can be difficult to determine whether some types of food you can charge GST on. You can find out the GST status of more than 500 (yes 500) food items via ATO’s detailed food list. Who would have thought? They also have handy flow chart to help you decide.
You can’t claim the GST paid on purchases if your supplier isn’t registered for GST. It goes beyond receiving a Tax Invoice with an ABN and a GST charge included – this isn’t proof that they are in fact registered. Use the ABN lookup tool to find out whether individual suppliers are registered for GST here: ABN Lookup Tool
Disposing of a capital asset eg vehicle, factory equipment? This is still a taxable sale, even if you sell to an individual and not another business. The sale will need to be reported at G1 Total Sales on your BAS. Trading in a car is usually considered a taxable sale as well, and will need to be reported on your BAS. More specific information can be found on the ATO website here: GST and Motor Vehicles
Don’t forget that if you outsource your BAS preparation and lodgement to a bookkeeper, they must be a registered BAS Agent. GST is a tax and bookkeepers must have the necessary qualifications, substantial hands-on experience and be continually refreshing their knowledge of GST law.
Are you registered for GST? What do you like/dislike about having to complete your own IAS or BAS?
You might also like these other posts with bookkeeping tips:
Okay, so I may have a warped sense of what constitutes fun – but hear me out on this one. If you find bookkeeping a pain in the butt and a necessary evil in order to keep the taxman happy, then take 5 minutes to read my:
6 ways to make bookkeeping fun!
Get creative! Jazz up your accounts files with some nice labels or replace your folders with colour co-ordinated ones. There are some really nice colours out there now, and you can colour co-ordinate your whole office.
Every time you finish your bookkeeping tasks for the week, reward yourself with a little of something that puts a smile on your face. (Did somebody say chocolate?)
Take time out to meet other business owners and attend a bookkeeping workshop. As well as picking up some hints and getting you enthused about getting back to your bookkeeping you’ll probably get a morning or afternoon tea thrown in as well. There are workshops that cover debt collection, payroll, tax, software, cloud computing and lots more.
Have your favourite music playing quietly in the background, grab a glass of wine (or maybe just half in my case or else my accounts would be a shambles) and enjoy the time to yourself.
Get organised. Have a spring clean of your accounts documents and files and feel good about how organised you are. I’ll be writing more on accounts organisation a little down the track (try this post here).
I recently posted Save Time and Remove Doubt With your Bookkeeping and had a question from a follower and small business owner based in the US. She is looking for a good checklist to help her compile her tax records at the end of the financial year. She is a fellow blogger passionate about her industry and improving her business processes.
Are there any readers who can help? Maybe you are a small business owner based in the US. Or you could be a bookkeeper or accountant based in the US willing to point us in the right direction?
Tax records differ from country to country so it would be interesting to see what information is out there and get some great tips along the way.
There are certain procedures and conditions an employer must have in place for their employees in Australia.
Don’t be afraid to ask your employer for any of these things if they aren’t currently being provided – it may be the case that your employer didn’t know themselves.
Payslips – must be provided to you within 1 working day of being paid, even if you are on leave.
Holiday and personal leave balances – must be provided to you if you request it.
Superannuation – has to be paid into your nominated super fund at least every 3 months.
Deductions – if you are under 18 your employer cannot deduct money from your pay unless your parent/guardian has agreed in writing.
Jury duty – your employer must give you leave to attend jury selection and jury duty (called community service leave). This includes casual employees. You must give your employer reasonable notice of the leave and, if they ask for it, evidence of the need to attend the community service.
Payment Summaries – must be provided to you by 14th July, even if no tax was withheld from your pay.
Fair work information statement – must be provided to you before, or as soon as possible after, you begin employment.
Extra tax – if you want your employer to deduct extra PAYG withholding tax from your pay then you must both agree in writing.
Tax File Number declaration form – must be provided to you when you begin employment, and your employer must submit the completed form to ATO within 14 days of your start date.
These are just some of the rights you have as an employee, but there are a few more that are useful to know. These can be found on the Australian Government’s Fair Work website and the ATO website.
The ATO has recently made some changes that might affect you.
Have you hired a new employee recently?
You’ll need to complete a Tax File Number Declaration form and send it in to the ATO within 14 days of the employee’s start date. If you are manually completing the form and posting it to the ATO, don’t forget to keep a copy for your own records and write the date posted on it, as the latest version of this form doesn’t include a copy for employers to keep. From September this year you won’t be able to get these forms from newsagencies anymore – the ATO is very much moving away from paper-based forms and encouraging business to embrace their online services.
There are benefits to lodging forms online, so don’t be afraid to look into the ATO’s Business Portal or Standard Business Reporting (SBR).