Airbnb Hands Over Data on Hosts to Australian Taxation Office

In a crackdown on Australian hosts, does it affect Japan property investors?

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This week Airbnb has announced that it has handed over the information about 190,000 property owners to the Australian Taxation Office (hereinafter ATO) about their income generated through the platform. The purpose of this move is to help tax authorities find out if any of the taxpayers have not declared their income from the short-term rentals and overstated their deductions.

We have previously seen cases of property owners and managers trying to circumvent the tax system by not properly declaring their income. Airbnb defends its move and hopes to improve the taxation system for participants of the sharing economy. Let us take a closer look at what happened.

Why share data?

Handing information over to the Taxation Office is a part of the government’s efforts to increase awareness about responsibilities to pay taxes among Australians who are part of the sharing economy. Currently, about 10.8 million people fit the description.

Brent Thomas, the head of public policy for Australia and New Zealand at Airbnb, explained that ATO needed information about Airbnb hosts since the tax system is rather complex, and this move will help to make it easier for hosts to use the platform and properly declare the income. He believes that the system is difficult to navigate and comes as a barrier to those Australians who would like to add to their income through sharing the property. At the same time, ATO would become more efficient in processing tax data.

Airbnb has handed over the information about 190,000 property owners to the Australian Taxation Office.

Moreover, the proper declaration of income from Airbnb services is a part of the black economy taskforce effort, and Airbnb has made a submission to it. Mr. Thomas underlines that the current tax rules were written before the sharing economy came into existence and thus does not provide an adequate regulatory framework to accommodate reports about this type of income.

To address the issue, Airbnb also expressed its support to the purpose of implementing a framework that will help Australians to easier and cheaper pay their taxes when it comes to the sharing economy platforms. At the same time, the new framework should also take into account the data privacy laws. The treasury has already released a consultation paper about the implementation of reporting income from the sharing economy to facilitate the process.

What kind of data did ATO get?

A spokesperson for the Taxation Office explained that the office started the data-matching program last year in August in order to find out people who get an extra income from short-term rentals. ATO will get the information about income earned per each listing on a platform and the dates of those listings along with inquiry and booking rates, charged or quoted rates per night, etc. Hosts were informed about the start of the matching program.

Will it affect Japanese Property investors?

While it’s still unclear at this stage whether overseas properties owned by Australian residents was included in the information handed over, it still remains a risk. If investors in Australia were renting or listing their Japan based properties on Airbnb then there is a high probability that the information has been passed on. Investors will need to assess their local tax liability and also their Japan tax liability. In Japan there are 5 tax areas that buyers should be aware of:

  1. Property Acquisition Tax
  2. Fixed Asset Tax
  3. Withholding / Income Tax
  4. Consumption Tax
  5. Capital Gains Tax

Further information check our article on Japanese Tax and Accounting for Investment properties.

It may also be interesting for potential investors to note that the Japanese tax department is becoming very tough on foreign investors and has recently fined those for failing to pay taxes.

Reactions

Quirin Schwaighofer of Airbnb property management company MadeComfy has no worries about the information transfer to ATO. The company that runs about 2,000 beds does not see it as a crackdown underlining that Airbnb made everything possible to instruct the parties about their respective obligations. Thus, the news of ATO getting the data did not come as a surprise.

"Otsumami" - a bite size snack:

Failing to properly report income generated through sharing economy platforms may lead to serious consequences. Be sure to declare all of your income sources and the correct amount of taxable income.

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Written by Viktoriya Kuzina

Likes business in Japan and helping entrepreneurs become successful.

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