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Tax from shared economy in government crosshairs

News that Ontario’s Ministry of Finance is partnering with Airbnb to educate consumers on their tax responsibilities when using the online service is just the latest example of how income from the shared economy has become a government priority, says Toronto tax litigation lawyer David J. Rotfleisch.

In a recent announcement, the Ontario government confirmed that it is collaborating with accommodation marketplace site Airbnb on a pilot project, aimed at raising awareness of the rights and responsibilities of homeowners and consumers when offering or booking online accommodations through the site.

Specifically, the project is focused on ensuring users know how to follow tax laws, such as reporting rental income, as well as on issues such as consumer protection rights under contracts, accessibility requirements and other regulatory and safety obligations, such as having a functioning smoke alarm and carbon monoxide detector.

“Both individuals and corporations are now required to report the websites they use to generate income, making it easier for the CRA to audit the income reported to ensure all Internet-sourced income has been accounted for,” explains Rotfleisch, founding tax lawyer at Rotfleisch & Samulovitch Professional Corporation

As part of the pilot project, Airbnb plans to send hosts an email notification during tax season to remind them of their tax obligations.

According to the Ministry of Finance, more than 11,000 hosts in Ontario currently list their properties on Airbnb, and a typical host in the province makes about $280 a month in additional income. In 2015, more than 375,000 people visited Ontario via Airbnb.

“Income from the Internet-shared economy is in the crosshairs of government and this announcement is just the latest indicator,” says Rotfleisch.

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