Councils in New South Wales are still badly dazed and confused when it comes to regulating sharing economy phenomena like Airbnb, with the online firm now reckoning it has a whopping 20,000 active listings in the state and a supercharged growth rate of 167 per cent.

The eyebrow raising figures are revealed in Airbnb’s submission to the Inquiry into Adequacy of the regulation of short-term holiday letting in New South Wales now being run by the NSW Parliament.

In the submission, the global accommodation matchmaker accuses councils of lacking “a clear policy for home sharing” and even threatening “hosts” with fines “as high as $1.1 million for occasionally renting out spare space in their homes.”

It’s an issue that simply isn’t going away, and nor is Airbnb’s lobbying.

Council regulatory enforcement – or interference and harassment ­if you look at from a host’s perspective – has become a major public policy focus for Airbnb as the company now seeks get some legal consistency and limit resistance among local government lawmakers that check-up that dwelling uses are conform to the rules.

And if Airbnb’s figures are to be believed – and there’s not a lot over other aggregated data out there – cashing in on the sharing economy is easily lucrative enough to upgrade your major appliances and pay your utility bills.

“The average Airbnb host in Australia earns roughly A$7,100 per year, helping them make ends meet,” Airbnb’s submission says.

That’s the kind of online income stream most loss-making holiday home owners would gladly grab, not to mention a bonanza for anyone prepared to bunk down with friends or relatives for a few nights a month.

But potential guests aren’t the only ones clicking eagerly on free online profiles and prices.

Successful hosts now increasingly attract the scrutiny of the Australian Taxation Office, not to mention welfare fraud investigators from Centrelink.

Of course being an offshore payments business operating in Australia, Airbnb isn’t exactly about to attack the Tax Office.

“The Australian Tax Office (ATO) recently released clarifying guidelines for participants in the sharing economy with examples of how different types of services are to be taxed,” the company cheerily says in its submission.

“Airbnb welcomed this clarity provided by the ATO, as hosts now have a clearer understanding of their tax obligations.”

The sharing economy actually helps people pay tax, says the submission.

“Airbnb sends an annual notice to hosts in Australia informing them of the total amount of income they have earned through Airbnb, which both reminds them of their obligation to pay income taxes on the income they earn through Airbnb and helps make reporting their income easier.”

Fortunately for Airbnb, there’s usually only one Taxation Office per country it has to deal with.

That’s not the case for Australia’s more than 560 local governments and councils that are still staunchly intent on regulating what properties can and can’t be used for.

But those councils are now very clearly in the crosshairs for Airbnb’s regulatory rehabilitation efforts, with muscle now being applied to the NSW State government through the committee process to limit annoying red tape.

High on its shopping list is the use of state-wide planning powers to thwart councils who pursue property owners trying to make an extra buck.

“The New South Wales Government should put in place a State Planning Policy which makes it clear that individuals are allowed to occasionally rent out the homes they live in without the need for burdensome approvals or licenses,” the first of Airbnb’s two key recommendations says.

“As different communities have different needs, concerns and issues, the State should give Councils the flexibility to make their own decisions about professionally-managed holiday homes,” says the second recommendation.”

But NSW councils have their own recommendations for the Baird government, which are unlikely to please Airbnb.

Peak association, Local Government NSW – which describes itself as the “sword and the shield” of the local government sector – says councils “have been caught in the crossfire of this debate.”

While some residents want lettings through services like Airbnb more tightly regulated or even banned, other home owners may want to cash-in.

The big ask from LGNSW is that the State government make some decisions on the definitions surrounding what is a dwelling and how it can be used and rented.

More specifically LGNSW wants clarification around:

• Whether “ongoing continual rental of a property may change its use to become ‘tourist and visitor accommodation’”;
• The number and proportion of rooms that can be rented out in a dwelling, that is definded under the definition of dwellings;
• The number of days a dwelling can be rented in total before it constitutes another use, unless it is under a long term lease.

The peak council body also wants the definition of bed and breakfasts dealt with, to clarify “at what point sharing of a house constitutes a bed and breakfast.

Parents of many teenage children will be naturally interested in that answer too.