At a glance
Lots of people use online marketplaces in different ways. For some, they conduct their entire business online and earn their living from providing services or renting out their assets. For others, it might be a side hustle or a small amount of income, but it still needs to be declared to the tax office.
The ATO is a world leader in gathering data from information sources and matching it to taxpayers’ returns. Australians would be familiar, for example, with the interests and dividends that pop up on our tax returns each year.
The ATO, for almost the past decade, has been gathering data from selected platforms and matching them for compliance purposes. This legislation and this new regime mean that all platform operators will now need to gather and report this information.
This legislation targets service providers and those who earn income from lending or renting assets through online marketplaces and online platforms.
It does not matter whether you are earning a lot or a little bit – the ATO does not care. Whether it's your first job or your tenth job, they want to know about every dollar, so it is important that you declare all your income. That way, you're paying the right amount of tax.
More than a hobby
This is about platform operators and users telling the tax office about income that they probably should be disclosing right now. If we ask, “where am I earning this income?”, a lot of people will say, “Oh, I have this as a hobby”.
For most hobbies, you'll find that you're probably spending more than you get back. You're not earning a lot of income, and you incur only minor expenses. That will tend to be how the tax office approaches it, and if you want to argue that you have a hobby and are not earning income that is subject to tax, you'll need to be able to demonstrate that.
Fundamentally, it comes down to one question – “Did you earn accessible income?” These are the normal tax rules that you need to declare.
From that, you work out your taxable income by reducing it with your expense claims. For example, if you drive people around, do odd jobs or freelance work, rent out your car or even storage space, and or run social media accounts, all that income needs to be declared.