Op-Ed: SERR means nowhere left for accommodation providers to hide from the ATO

By Sam Mohammad, RSM Australia

It is time for accommodation providers to embrace the Sharing Economy Reporting Regime.

For many years, the Australian Government lacked visibility into transactions occurring in the sharing economy, particularly among short- and long term accommodation providers. This lack of oversight created a significant risk of income tax and GST avoidance.

‘Mum and dad’ owners of Bed and Breakfasts, investors renting out their holiday homes during the holidays, and even owner occupiers renting out a spare room on the weekend may have felt tempted to omit the income from these activities on their tax returns and business activity statements (BAS). They might have believed that their income was too small for the Australian Tax Office (ATO) to audit or that it would simply go unnoticed.

The Sharing Economy Reporting Regime (SERR) counters those misconceptions by specifically requiring operators of websites, platforms, internet portals, software and apps (collectively, electronic distribution platforms or EDPs) who facilitate accommodation bookings to report all transactions that sellers make through the EDP to the Tax Office.

What does this mean for accommodation providers, such as investors letting out their unit/s via a booking website?

In simple terms, if you use any EDP, such as a website or app, to advertise and provide any accommodation to the public, the ATO will now have visibility over that transaction. This means the ATO will be able to match the data between the information the EDP provides and the tax returns and BAS lodgements the owner provides. If there are any discrepancies between the two data sources or if the owner is not actually lodging any income tax returns or BAS, the owner could well expect a knock on the door from the ATO asking them to explain the reason for any differences.

Bearing in mind that much of the heavy lifting of the data matching is being done by computers and AI, there is an ever-diminishing chance that non-compliant owners will be able to remain in the shadows.

What does this mean for website operators and other EDP operators?

Although the SERR is designed to target property owners who are under-reporting their taxes, the obligations of the SERR actually fall on the EDP operators.

Since July 1, 2024, all EDPs who facilitate transactions involving services (for example, short and long-term accommodation, ridesourcing, hiring assets and food delivery) are required to provide the ATO with a report of all transactions that have occurred involving Australian customers/property located in Australia over the last six months.

The report itself must be provided in a standard format (XBRL) and be lodged with the ATO within 31 days of the end of the six months. For example, for transactions that occur from 1 July 2024 to 31 December 2024, the EDP must report to the Tax Office by January 31, 2025.

What information does the EDP operator report to the Tax Office?

EDP operators will report a range of information about the transactions they have facilitated and the identity of the property owner.

This may include:

• The name and property details of the owner.

• Contact details (address, email and phone) of the owner.

• ABN or trading name of the owner.

• Transaction date and value.

• GST amounts on income collected.

• Bank account details of the owner.

What should EDP operators be doing?

Most EDP operators should have started collecting the required information on sellers and transactions, especially with the imminent reporting deadline of January 31, 2025. EDP operators should also have developed their standard report to lodge with the Tax Office as there are fines for late or non-lodgement.

For large EDP operators who fail to lodge on time, the penalties can be extremely high – up to $825,000 for a late lodgement. While the penalties are not as high for smaller EDP operators, there are still financial and reputational risks that come with noncompliance.

What should owners be doing?

Property owners who have been renting out their property to generate income should always have been reporting and paying taxes on that income. With the ATO about to have greater visibility over ‘side hustles’ facilitated through platforms like Airbnb and Booking.com, property owners will need to be especially diligent about reporting and paying taxes on all their income. They can no longer rely on being too small for anyone to notice.

Seeking support

The ATO has provided several fact sheets and other public guidance to help EDP operators understand their obligations. That said, building and maintaining the six-monthly reports and knowing what details those reports need to contain can be tricky. As such, it will be important for EDP operators to talk to an experienced tax or accounting adviser familiar with the SERR to ensure they meet their obligations.

Bio

RSM Australia Partner Sam Mohammad leads RSM’s national indirect tax practice. Sam is a qualified chartered accountant and legal practitioner with 20 years of advisory experience, specialising in providing practical and easy-to-understand advice on complex tax matters.