A personal service is a service involving time - or task-based work performed by 1 or more people at the request of a buyer. It is adapted to the requirements of the buyer who has requested it.
There are many types of personal services that can be provided through an online marketplace.
Features of personal services
You're providing your time, labour or services through an online marketplace for a fee.
Common examples include:
- delivering goods - you're hired through an online marketplace to deliver goods, excluding food and beverages.
- performing tasks and activities through for example WeDo, MadPaws, Askatasker, JobList for other people that relate to home or private aspects of daily life.
- providing professional services through for example Upwork, Fiverr, Air Tasker, Builderscrack.
It does not matter whether you are an employee, independent contractor, carrying on a business, or none of these. Whenever you provide these services in return for a fee, the income you earn is taxable and must be declared in your tax return – even if it's a one-off payment.
If you are running a business, your tax obligations are the same. This applies when you source your work through:
- the sharing economy
- traditional methods, such as tenders, contracts or word-of-mouth.
Income tax obligations
Fees paid to you when you provide personal services are taxable income.
If you're providing your time, labour or services through an online marketplace for a fee you:
- must have an IRD number
- declare all income you receive in your tax return
- can only claim expenses directly relating to you provided a service
- must keep records of all your income and expenses.
GST obligations
If you're providing personal services through an online marketplace, you must register for GST if you earn more than $60,000 from all taxable activities including providing personal services in any 12-month period.
If you’re already GST-registered, for example as an IT contractor, you do not need to register again and can use the same GST number.
If you're GST-registered, you can claim GST for expenses related to your business.