Australia: Proposed reporting regime for the sharing or “gig” economy
Proposal would require operators of electronic distribution platforms to provide information on certain transactions made through their platforms.
Proposed reporting regime
A proposal to implement a sharing economy reporting regime has been reintroduced to Parliament.
The regime was initially recommended in the Black Economy Taskforce (2017 final report) [PDF 7.7 MB]. The measure then was included in the 2019-20 Mid-Year Economic and Fiscal Outlook, and introduced as a bill in 2021 which lapsed when parliament was prorogued, before being reintroduced to parliament via the Treasury Laws Amendment (2022 Measures No. 2) Bill 2022.
The impetus for this proposal is the growth of the sharing or “gig” economy (estimated to be worth over $6 billion*), and the potential for sellers earning income in this economy to underpay tax either deliberately or unintentionally. The Black Economy Taskforce considered that a reporting regime was needed for the Australian Taxation Office (ATO) to gain information on compliance of sharing economy participants; to send a clear signal to sharing economy participants as to the taxable nature of payments; and to align Australia with international best practices.
The proposed reporting regime would require operators of an electronic distribution platform to provide information on certain transactions made through the platform to the ATO—via the Taxable Payments Reporting System (an existing data matching framework that currently applies to businesses in specific industries such as building and construction industry, supplies of cleaning, security or surveillance services, supplies of information technology services and other transactions) requiring these businesses to report payments to contractors via a Taxable Payments Annual Report (TPAR).
Under the proposal:
- An “electronic distribution platform” would be defined as a service (including a website, internet portal, gateway, store or marketplace) delivered by means of electronic communication, when the service allows entities to make supplies available to end-users. While this is based on the definition for goods and services tax (GST) purposes, it would be broader in scope.
- In relation to exclusions from the definition, a service would not be an electronic distribution platform solely because it is a carriage service, or a service that provides access to a payment system, processes payments or provides certain vouchers. Further, an explanatory memorandum states that a service will not be an electronic distribution platform when it merely advertises or creates awareness of possible supplies.
- The types of reportable transactions generally would comprise those that are for consideration, and occur between a buyer and seller for a supply (including a supply of goods, services, real property, or advice and information), made through the platform by the seller. Broadly, the supply would need to be connected with “Australia.” However, supplies involving the transfer of ownership (i.e., legal title) of goods or real property, or financial supplies, would be excluded from the regime. For example, the rental of goods could be in-scope, but not the sale of goods. In addition, when the consideration is subject to Australia’s withholding tax regime, the transaction would not be required to be reported.
- The precise information to be provided by an operator has yet to be specified, but the expectation is that the information to identify the seller (e.g., name, ABN, address, phone number, bank account details) and the nature of the transaction (e.g., type of supply, money received from supply) would be requested.
- The regime is proposed to apply from 1 July 2023 for transactions in relation to the supply of taxi travel and short-term accommodation, and from 1 July 2024 for all other transactions.
Operators of an electronic distribution platform need to consider preparing for the additional compliance that would be required.
Relevant considerations may include:
- Whether additional mechanisms need to be put in place in order to verify information of the sellers. Unlike those businesses currently reporting contractor payments under the TPAR, the sellers in the sharing economy are not typically providing services to the operator, hence more work would need to be undertaken by operators when they currently have less opportunity to verify seller information.
- How operators can efficiently extract and report the data within a relatively short timeframe (potentially within 31 days of the end of the reporting period).
- There may be several operators within a multinational group (including non-residents), and hence multiple filings may be required.
- When the operator is a “significant global entity,” increased penalties (up to $555,000) may be imposed for a failure to file (lodge) the TPAR by its due date.
For more information, contact a KPMG tax professional in Australia:
Paul Sorrell | firstname.lastname@example.org
Amanda Maguire | email@example.com
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