In the space of a few years, the phenomenal rise of the ‘sharing economy’ has had a significant impact in Australia. But beware the social security and tax implications for people receiving a pension.
With the rise in popularity of services such as Uber, Airbnb and Stayz, it’s easy to see why older Australians are signing up to become providers and help give their retirement funds a little boost.
To understand this business model, we must look at what the sharing economy is.
It refers to the activity of sharing human, physical and intellectual resources, or in simpler terms, it allows people to share resources, such as their personal assets, services or skills, for a fee via an app or a website.
If you are thinking of registering to become a provider with companies such as these, it’s important to speak to your advisor or to the Department of Human Services first, to assess how any income earned might affect your pension.
Looking at someone earning income through ride sharing services, such as Uber, different income and assets test free areas apply, based on whether a person is partnered or single, or if they’re a homeowner.
And for tax purposes, people are considered contractors and not employees. This means all Uber drivers need to register for an Australian Business Number (ABN) and Goods and Services Tax (GST) with the Australian Taxation Office (ATO), as they are providing ‘taxi travel’ under GST law.
Drivers must also lodge business activity statements and report any income from Uber in their tax returns to the ATO. Assessable income is counted in the Centrelink income test, however, we do not take into account the GST, as this is paid to the ATO.
Income from self-employment is treated differently to income earned from wages or a salary, so it’s best to contact the Department of Human Services first, to determine how you should report your income.
For example: A single pensioner’s total income can be up to $168 per fortnight, and couples can earn a combined total of up to $300 per fortnight, before the Age Pension is affected.. Anything over these amounts will reduce the pension by 50 cents for every dollar.
If you are jumping on the home sharing bandwagon through companies like Airbnb, and choosing to rent out a spare room or the backyard granny flat to earn some extra money, this make affect your pension payment.
The family home is not counted in the Age Pension assets test. However, if you choose to rent out any part of your family home through Airbnb, that portion of the home may be an assessable asset.
Speak to your advisor or the Department of Human Services first before making any decisions to rent out a room of your home, so they can determine how you should be reporting your income, and if your payment will be affected.
For example: Renting out a room in the family home every now and then will be considered as income from boarders and lodgers. Generally a portion of the income received from boarders and lodgers will be accounted for.
The best way to notify Dept of Human Services of any income earned as an Airbnb host or an Uber driver, is by contacting the Older Australians phone line on 132 300 or visiting a service centre.
For more information relevant to older Australians, go to: humanservices.gov.au/olderaustralians
Source: Money & Life, Financial Planning Association of Australia