• CPA Australia has published our 2020-21 tax tips for the gig economy
• Income from the gig economy and bartering or sharing is assessable income.
• The ATO matches data from gig economy platforms with taxpayers' returns.
A growing number of Australian taxpayers earn income from the gig economy and must include it in their tax return, according to Australia's leading professional accounting body, CPA Australia.
Senior Manager Tax Policy Elinor Kasapidis says, "Lots of people turned to the gig economy to make ends meet during COVID-19.
"The ATO is aware of these 'side hustles' and matches data from platforms like Uber, Airbnb and AirTasker against individuals' tax returns. This means the jig is up on the gig economy this tax time."
Gig economy workers often work as independent contractors, but the term broadly includes people who earn income from bartering or sharing as well.
"If you drive people around, do odd jobs or free-lance work, rent out your car or storage space, run social media accounts or sell products, you need to declare this income in your tax return.
"The good news is that your expenses from earning this income may be deductible."
Gig workers can claim deductions for most costs incurred in earning their income. Examples can include travel, vehicle, marketing, financing and home-office expenses.
"You can only claim a deduction for the work-related proportion of your use. Picking up an Uber fare on the way home from visiting mum doesn't entitle you to write off all your car expenses."
The ATO is cracking down on the cash economy. The consequences of not declaring cash income from the gig economy may include interest on your tax bill and criminal and administrative penalties.
"It's legal to receive payments in cash rather than electronically but you must report these amounts in your tax return."
You don't need to declare income from activities that are little more than hobbies or not intended to make a profit, but you can't claim a deduction for them either.
"Don't worry, the hundred bucks you earned from selling your designer handbag or off-loading your 'barely used' bike on eBay doesn't need to be reported."
COVID-19 tax issues
"During lockdowns, some gig economy activities like ridesharing declined, while others such as food delivery skyrocketed.
"If your deductions are based on a representative period and your usual pattern of work changed due to COVID-19, you may need to prepare an additional record for this period."
Contractors who received JobKeeper payments or other business grants must record these as business income in their tax return. These are assessable and you may need to pay tax on them.
