Shar­ing, car­ing busi­ness model

The Weekly Advertiser Horsham - - News -

With help from the in­ter­net, the lat­est busi­ness model is qui­etly turning mil­lions of ‘av­er­age Joes’ into en­trepreneur­s.

Uber is con­nect­ing riders with driv­ers through apps, Airbnb is con­nect­ing hosts with trav­ellers look­ing for a place to sleep through its web­site and Zopa is con­nect­ing lenders with bor­row­ers through its peer-to-peer lend­ing ser­vice.

Many in­di­vid­u­als are un­lock­ing the value of their un­der­used re­sources by shar­ing them with oth­ers in ex­change for a ben­e­fit – both mon­e­tary and oth­er­wise – giv­ing us the term ‘shar­ing econ­omy’.

The shar­ing econ­omy en­com­passes a broad va­ri­ety of ser­vices.

You can earn ex­tra cash by rent­ing out your spare room, car or space in your garage; car-pool­ing; be­ing a per­sonal tour guide; run­ning er­rands for peo­ple who are time-poor; or you can trade your clothes or play swap­sies with your house. The op­por­tu­ni­ties are end­less.

The con­cept of the shar­ing econ­omy is not sim­ply the match­ing of sup­ply and de­mand like tra­di­tional eco­nomic the­ory, but rather the rent­ing, shar­ing and col­lab­o­ra­tive con­sump­tion of un­der­used as­sets, which also in­volves an el­e­ment of trust.

We live in ex­cit­ing times. This new econ­omy is gain­ing mo­men­tum across the world.

New shar­ing busi­nesses are con­stantly emerg­ing. Some work, some don’t. As with any new ven­ture, al­ways seek pro­fes­sional ad­vice first.

If you are con­sid­er­ing tak­ing part in the shar­ing econ­omy, you should con­sider the risks in­volved.

As the model is still in its in­fancy there are many grey ar­eas, par­tic­u­larly in re­la­tion to reg­u­la­tory re­quire­ments and in­surance.

A con­fus­ing area for some is how this is taxed.

Al­though the shar­ing econ­omy can be thought of as an un­con­ven­tional sys­tem, it is none­the­less, viewed by the Aus­tralian Tax Of­fice the same way as a tra­di­tional eco­nomic sys­tem.

Tax im­pli­ca­tions

Tax law ap­plies to the shar­ing econ­omy the same way it would ap­ply in a con­ven­tional econ­omy.

If you are earn­ing an in­come from rent­ing out a bed­room or run­ning er­rands, the ATO will ex­pect you to keep records of any in­come re­ceived along with any al­low­able de­duc­tions to in­clude in your tax re­turn.

What about GST?

If your shar­ing ser­vices gen­er­ate an an­nual turnover of $75,000 or more, you are re­quired to reg­is­ter your busi­ness for GST.

Keep in mind that this also in­cludes in­come from any other en­ter­prise that you might be in­volved in. How­ever, it does not in­clude any rental in­come you re­ceive from a res­i­den­tial prop­erty.

On the other hand, if you are pro­vid­ing a ‘taxi ser­vice’ of some kind, you need to reg­is­ter for GST re­gard­less of your level of in­come.

This in­cludes any ser­vice where you drive pas­sen­gers in a ve­hi­cle in ex­change for a fee.

The ATO has more de­tails on its web­site. Just type ‘shar­ing econ­omy and tax’ into your pre­ferred search en­gine, or con­tact your fi­nan­cial ad­viser for in­di­vid­ual guid­ance through this ex­cit­ing new land­scape.

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