Do I need to declare income from a hobby, casual holiday rental or the car I sold online?
When clients first come to us they can be surprised when we ask some pretty personal questions. For example, do you have a hobby or a holiday house? The reason we ask is because if we don’t, it doesn’t mean the ATO doesn’t already know about it. What might have started earnestly as hobby a few years back, the ATO might view as an income earner on Etsy.com. Do you rent a room on AirBnB from time to time? Or for the car enthusiasts, how many cars did you do up and sell this year on carsales.com.au? Generally, many people might think this income is incidental because they view it as a hobby or didn’t include it as income in their tax return last year and didn’t get audited.
Where does ATO get income data from?
You might be surprised how much access ATO now has to transactions made with third parties, particularly popular online selling and social platforms. The ATO calls this data matching and they are already collecting information from a wide range of third-party sources, both public and private, and openly admit, more than 600 million transactions are reported to the ATO annually. Examples of third-party sources provided by the ATO are listed below.
|Examples of third-party data sources||Information provided|
|Banks, financial institutions and investment bodies|
|Employers||Payments to employees and contractors|
|State and territory motor vehicle registering bodies||Motor vehicles sold, transferred or newly registered|
|State and territory title offices and revenue agencies||Sales and other transfers of real property|
|Government bodies||Pensions, benefits, rebates, taxable grants and other payments|
|Australian Transaction Reports and Analysis Centre (AUSTRAC) and our international treaty partners||Foreign source income|
Online selling platforms
Quantity and value of online sales
Sharing economy facilitators
Payments to participants
Financial institutions providing merchant facilities and administrators of specialised payment systems
|Electronic payments processed for business including total credit and debit card payments received|
Stock exchanges and share registries
Businesses in the building and construction industry
Payments made for building and construction services
Confirmation of health insurance cover and premiums paid
So if you happened to have “forgotten” to tell us about your hobby or holiday rental. Get in touch so we can provide advice on the tax implications of this income. In some cases, a hobby is a hobby, for example, if the materials cost you more than you make on Etsy. But be safe and not sorry, ask first, it’s easier than begging for forgiveness from the ATO later.
In certain cases, we can also advise on how to use AirBNB without incurring a tax liability!