The Sharing Economy and Tax

There are various sharing economy websites and applications working in Australia. The general populations who give merchandise or services through any of them have to consider how GST and wage charge applies to their income.

What is the Sharing Economy?

The Sharing economy connects users and suppliers through a facilitator who usually operates an app or website.

Generally Sharing Economy includes?

• Leasing a room or an entire house or unit for a short timeframe premise
• Giving taxi travel Services (called 'ride-sourcing') for a charge
• Giving individual Services, for example, such as creative or professional services like graphic design, creating websites, or odd jobs like deliveries and furniture assembly
• Leasing an auto parking spot.

The Sharing economy and tax

 If you are involved in the sharing economy, you need to consider the following things:

• If you are carrying on an enterprise whether you need an ABN or you need to register for GST and lodge activity statements
• If the price of the goods and services you are providing includes GST
• If and when you are supposed to provide tax invoices for your sales
• Whether you are Supposed to declare your income in your income tax return or not
• How your sharing economy activities effect your GST  and tax obligations

Providing taxi travel services: If you are a part of organisation providing ride-sourcing services then according to law you need an ABN and you need to be registered for GST and you need to account for GST on the full amount of every fare regardless of how much you earn.

Leasing out a room or all of your house: If you are renting out a room or a whole house then GST wouldn’t be the part of that as GST doesn’t apply to residential rents,so you are not liable for GST on the rent you charge and you cannot claim any GST credits for associated costs.

Renting goods and services: If you are already registered for GST, and you are earning extra money providing services through a sharing economy app or website, you need to account for GST on that extra money through your existing ABN and GST registration.

Leasing an auto parking spot: If you rent out a car parking space it can mean that you are running an enterprise. You will need to get an ABN and register for GST if either:

• You earn, or are likely to earn, $75,000 or more per year renting out the car parking space(s)
• You have an existing enterprise for which you are registered for GST
• Your turnover is, or is likely to be, $75,000 or more a year for all of the goods and services you provide while carrying on a number of enterprises.

For further information about Sharing Economy and how to avoid tax debt you need to contact 1300 488 330

If you are going to outsource bookkeeping for your organisation, when would it be a good idea for you to be that right? That all relies on upon your business and the season of year help. Following tips will help you to decide the best time to do the switch.

Tip #1 – Commencing Of the Year

One of the easiest times to change over to outsourced bookkeeping services is toward the start of the year. That is on the grounds that you're bookkeeping group can work with your IPA to ensure that everything has a right starting equalisation.

Tip #2 - At the End of Month

Most organisations don't have the advantage of exchanging toward the start of the year. In the event that that is the situation, you might need to work out a transformation arrange so that your new online accountant can assume control once an entire month has wrapped up. Doing as such implies that they'll be strolling into crisply accommodated ledgers (accepting your books are present), and a fresh set of financial statements.

Tip #3 - At the End of a Two Week Notice

If you have an in-house bookkeeper that just gave his or her notification, you'll need to change over to outsourced bookkeeping as fast as could be expected under the circumstances so they can prepare with the active bookkeeper. That way, once the two weeks’ notice has passed, your new bookkeeping group will know where to get the pieces.

Tip #4 - When you’re paying Too Much

Once in a while it doesn't make a difference when you switch. If that you are paying a lot for an in-house solution or you're encountering a ton of errors, and as a result, getting a ton generally charges and punishments from sellers and the administration, the best time to change to outsourced bookkeeping is at this moment.

Non-payers can cause significant cash flow issues for any small business. Having said that, non-payer is also an inevitable liability for most small organizations. Several small business operators really feel baffled and bewildered when dealing with problems of non-payment or particularly if a non-payer is a recurring offender or if the sum of money owed is considerable.

How do you cope with non-payers in your organization?

Absolute Accounting Solutions recommendations:

1. Partial payment up front for products or services. A customer can’t take their groceries home without paying. When you supply products or services with an invoice period, you essentially become a creditor. You’re doing your client a favour by giving them something before they remunerate you. A minimum deposit is fair and it also minimizes risk of non-payment.

2. Avoid doing business with large companies who don’t care about you or respect you in interactions and negotiations. Basically, you can't effortlessly bargain with a business on completely different foot-hold. Size sometimes equals leverage, and it’s in your best interests to conduct business with like-sized companies — except if the big company offers something that you can’t get anywhere else.

3. Do not do too much business with a single company. Always have a back-up or Plan B in case projects ever go wrong. Of course, when you are first starting out, it can be difficult to avoid exclusive dealings. But it’s worth having something — or someone — else up your sleeve at all times.

4. Understanding contracts. A quote or service agreement document are both examples of contracts. Unless you’re a business of considerable size having a complex contract drawn up by a solicitor usually represents an unnecessary expense. An engagement letter, on the other hand, is always a good idea. An engagement letter outlines what is expected of each party over the course of a project.

5. Don't send generic, template statements. They can be frustrating, and are very easily disregarded by intentional non-payers. We have found that an invoicing time period of 14 days is ideal. We also recommend that you wait around right up until 45 days following the due date before chasing after payment. Follow up the letter or e-mail with a phone call once the client has had enough time to receive the message. Ask the client when they think that they will be able to pay the invoice. Record the day/date. If the client does not pay within the promised time-frame, remind them that they communicated this date as the cut-off. Ask them to confirm another date of payment. Repeat as necessary.

6. Be honest with a client about the impact of non-payment. As a small business, reliable payment for products or services delivered is very important for retaining cash flow. Point out to your client that their business is valuable to you but that you might not be able to work with them again or any more if you do not receive payment.

7. Factor non-payment into your rate — hopefully, this will come to no more than 2% of your total gross sales. Over the course of a financial year, most small businesses have to write off some projects as debts. You’re planning needs to take this into account.

Normally if a client has paid a few times, you will not have trouble with them paying in the future. However, this is not always the case. Be consistent with chasing your debtors, no matter who they are. Yes, it takes time — but this is another reason to factor non-payment into your rates.

At some point, we all hope that our businesses will expand to include a client base that allows us the position of picking and choosing only supportive, attentive clients.

Developing the skills of assertiveness, negotiation, and tenacity are important when dealing with non-payment in your small business. But learning when to let go is just as crucial.

Contact us if you want to discuss this further or for any others Accounting Solutions!! Talk to our Experts!!

As soon as we have filed your latest activity statement, you might realise that something has been left out or else you have forgot to include a particular item. The Australian tax system is based on “self-assessment”, meaning the ATO usually takes your word, under our guidance, and bases its assessment around the information it's been provided. But this isn't to say that the ATO might not look into the information it's been provided if, for instance, its data matching activity flags an issue. If the inadvertent error slides past the keeper, you will find alternatives to make it right.

Making changes

It is not all that unusual for businesses to need to make an alteration to a business activity statement (BAS) that has already been lodged — often there may be an unclaimed credit which simply slipped your mind, or you remember that you received some other type of income.

For instance, a quite normal situation arises when a business owner has already claimed fuel tax credits in line with the intention to make use of the fuel in in certain manner, but consequently uses it in another way. An error could be either on the credit or debit side. Again using fuel tax credits for example, a credit error means you claimed less fuel tax credits than you were entitled to — for example, you used a lower rate than you had been entitled to.

A debit error indicates you claimed more tax credits than you had been entitled to. This will occur if you:

• Made clerical errors, for example, double counting some fuel purchases

• Over calculated your eligible quantity of fuel

• Used a higher fuel tax credit rate than you were entitled to

• Claimed fuel tax credits for all fuel you acquired, not just the fuel meant for use in an eligible activity.

If you did not make an adjustment in the BAS period in which you become aware an adjustment was required, it becomes an error. In the event you made multiple errors in a BAS period, you have to treat each error individually when determining if it can be corrected and the way to correct it. Apart from these specific circumstances, there's also those straight-out mistakes that we all make every so often, or you might have forgotten to tell us something about your tax affairs at our appointment.

How we can help

We can use your current activity statement to improve many previous GST and fuel tax credit errors, to make claims for previous periods or to vary a PAYG instalment. 4 year time limit applies to claiming refunds and credits, and this “period of review” commences from the day you were required to lodge the activity statement.

If you can’t make such corrections on your current activity statement, we may have to revise the original BAS for you. Note that the process for correcting mistakes and making claims for previous periods can depend on the specific tax or type of credit involved, so you may need to check with us.

If you need to correct information you provided on a BAS and are not eligible to correct it on a later statement, you may need us to complete a revised activity statement. The important thing is to make sure that as soon as you realise that the information you have reported to the ATO is incorrect or incomplete, that you ask us to take actions to correct it.

And the way we can do this is to revise a BAS or apply to make an amendment (in fact the ATO generally treats a revised activity statement as an application to amend an assessment).

If the ATO accepts your revised amount in full and also the amendment is made within the period of review, the revised statement will be taken to be a notice of amended assessment. The date of after effect of the amended assessment is the day it is adjusted in your running balance account. However if the ATO does not accept the revised amounts entirely, it'll issue a notice of amended assessment.

In case your revision increases the tax you owe or reduces your credit, the ATO will generally treat your revised activity statement as a voluntary disclosure of unpaid tax or over-claimed credits. What this means is you’re likely to receive concessional treatment for any penalties and interest charges which may apply. (You will still have to pay any outstanding tax or overpaid credits, and we might have to request for a reduction in interest charges for you.)

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