Compulsory reporting to ATO for sharing economy platforms
Compulsory reporting of information to the ATO for sharing economy platforms is now in place. The legislation to implement this recently passed both Houses of Parliament after lapsing due to the election. With the passing of the legislation, the ATO is expected to monitor the compliance of participants more easily through data-matching. This new reporting regime will leverage the existing Taxable Payments Reporting System (TPRS) and encompass platforms from a variety of sectors including taxi services, short-term accommodation and delivery services.
Background
As a part of the government’s strategy to combat the tax compliance risks posed by the sharing economy, it has now legislated requirements for operators of electronic distribution platforms to provide information on transactions made through their platforms to the ATO. The sharing economy usually involves two parties entering into an agreement for one to provide services or loan personal assets to the other, for payment. This measure was originally introduced by the previous government but lapsed when the election was called.
To meet the definition of an electronic distribution platform, it must:
- deliver service through electronic communication (i.e. platforms operating over the internet including through applications, websites or other software); and
- allow entities to make supplies available to end-user consumers through the platform.
A service is not considered to be an electronic distribution platform if it only advertises or creates awareness of possible supplies, operates as a payment platform, or serves a communication function. Generally, electronic distribution platforms facilitate transactions between two otherwise unrelated parties in the sharing economy and act in a quality assurance role to ensure a seamless experience for both parties, regardless of whether the payment is processed by the platform or a third-party operator.
Examples of sharing economy electronic platform operators in a variety of sectors include Uber, Airbnb, Car Next Door, Menulog, Airtasker, and Freelancer, to name a few.
Taxable Payments Reporting System
Practically, electronic platform operators will be required to provide various information through the Taxable Payments Reporting System (TPRS) on certain transactions that occur through the platforms. Generally, it will only include transactions where the electronic platform facilitates a supply that is connected to Australia for consideration between two entities. However, it will not include supplies of goods where ownership of the goods is permanently changed, where title is transferred, or if the supply is a financial supply. The information obtained from TPRS will be used in ATO data-matching and help identify entities that may not be meeting their tax obligations.
The information will need to be reported to the Commissioner either annually, or at such other times as the Commissioner determines. Currently, businesses in the building and construction industry, cleaning, security, and information technology services are required to report annually by 28 August each year under the TPRS. It is envisaged that electronic platform operators will be required follow the same reporting deadlines.
Transactions in relation to the supply of taxi travel and short-term accommodation will be required to be reported to the ATO under TPRS from 1 July 2023. Electronic platform operators that deal in all other transactions will not have to report relevant transactions to the ATO under TPRS until 1 July 2024. This difference in application dates reflects the fact that data-matching protocols already exist between the ATO and operators of platforms that commonly facilitate taxi travel and short-term accommodation, hence, these entities do not need a lengthy lead time to ensure compliance.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.