The term “gig economy” refers to an employment market in which there are no permanent jobs, whether part-time or full-time. It’s a departure from the traditional talent acquisition model, in which an employee might stay with an organization through retirement. Skilled contractors and freelancers are recruited on an assignment basis and paid only when these short or long-term assignments and activities are completed under the much more flexible “gig” model.
During the COVID-19 period, many Australian taxpayers turned to the gig economy. Furthermore, the concept of sharing, such as renting out one’s space (even parking), or assets (such as a vehicle), generated money for the individuals mentioned. The Australian Tax Authorities tracked all these transactions by obtaining matching data from platforms such as Uber, Airbnb, among others, and compared it to tax returns filed by people to bring them all within the tax net.
In light of the findings, the Australian Treasury proposes to impose reporting requirements on B2C transactions involving electronic marketplaces and distribution platforms in the ‘gig’ and ‘sharing’ economies commencing July 1, 2022. They must submit a detailed report on all their third-party GST transactions, as well as other taxes and payments, that includes the platform’s seller history, transaction-by-transaction information, tax estimates, bank account information, and so on. The House of Representatives passed draft legislation to this effect on October 18, 2021.
The following are a few representative examples of what is covered under the aforesaid provision:
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- Providing cab travel services that are physically delivered.
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- Ride-sharing Services
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- Short-term accommodation services.
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- Food delivery services
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- Household services delivered in person.
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- Professional services delivered in a digital format.
The rollout would be done in stages, as outlined below:
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- Taxi ride sharing and overnight/short-term accommodation services would be implemented commencing in July 2022.
- All other activities covered by ‘gig’ and ‘share’ services, such as asset sharing, food delivery, tasking-based services, and so on, would start in July 2023. Various exemptions to the foregoing reporting requirements have also been proposed, including the following:
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- Transactions in which only the title to goods or real property is exchanged (Real Estate Sales).
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- Transactions involving the provision of financial services.
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- Transactions that are subject to tax withholding.
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- Electronic distribution platforms that are merely listing/advertising sites, etc.
The requirements outlined above are in conformity with EU directives on administrative cooperation (DAC 7). However, Australia’s Commissioner of Taxation has yet to establish the specific information that platform operators must provide.
For B2B sectors, Australia is striving to make obligatory e-invoicing required by July 2022. The e-invoice mandate currently only applies to Commonwealth government agencies. The Treasury department has already distributed a consultation paper to key stakeholders to solicit views. The government provided AUD 15 million in financing in May 2021 to stimulate the implementation of e-invoicing-related activities.
