Are you making money through platforms like Instagram, YouTube, OnlyFans, Twitch, or Patreon?
The world of social media has become a breeding ground for creativity and influence.
From makeup tutorials on YouTube to travelogues on Instagram, content creators are enchanting audiences and building empires online.
But with great influence comes great responsibility – tax responsibility!
So for all those social media influencers and content creators, we decided to share some essential tax tips. Let’s have a look at them.
Is Your Online Content Creation Considered A Business?
The Australian Taxation Office (ATO) considers you “in business” if your online activities meet certain criteria. Here are the key factors to consider:
- Repeated and Continuous Activities: This means your content creation isn’t just a one-time thing. You’re actively producing content on a regular basis.
- Planned, Organised, and Business-like Manner: Your approach to content creation suggests a business mindset. You invest time in planning, scheduling, and promoting your content.
- Intention to Make a Profit: While passion is important, aiming to generate income from your online activities is a key indicator of being “in business.”
Declaring Your Income
If the ATO considers you “in business,” you’ll need to declare all your income in your tax return.
This includes:
- Cash payments: This covers sponsorships, brand deals, and payments from platforms like YouTube or Twitch.
- Tips and gratuities: This includes “gifts” from followers, such as donations through platforms like Patreon.
- Collaborations: Income earned through joint projects with other creators need to be declared.
- Products for promotion: The value of products you receive for promotion needs to be included as income.
- Event appearances: Fees earned for attending events or conferences should be declared.
- Content licensing: Income from licensing your content to others needs to be reported.
Remember: Don’t forget to declare non-cash benefits like products or services received for promotion. These have a monetary value and need to be included in your income.
Foreign-Sourced Income
Many influencers earn money from overseas sources. It’s important to note that as an Australian resident for tax purposes, you must declare your worldwide income. This includes payments from international brands or platforms like YouTube and Twitch.
Deductions: What Can You Claim?
Now for the good news – deductions! As a content creator, you may be able to claim a variety of expenses related to your work.
Some common deductions include:
- Equipment: Cameras, lighting, computers, and software used for content creation.
- Home Office Expenses: If you work from home, you can claim a portion of your rent/mortgage interest, utilities, and internet costs.
- Travel Costs: If you travel specifically for content creation (not personal trips!), these expenses may be deductible.
- Subscriptions and Educational Materials: Courses or subscriptions that directly relate to improving your content creation skills.
- Marketing and Advertising: Costs associated with promoting your brand or content.
- Professional Services: Fees paid to accountants, lawyers, or managers.
Remember, you can only claim the portion of expenses directly related to your content creation work. If an item has both personal and business use, you’ll need to apportion the deduction accordingly.
Expenses You Cannot Claim
While many expenses are deductible, some are not. Generally, expenses with a private or domestic purpose are non-deductible.
For instance:
- Travel bloggers cannot claim their overseas journeys
- Food bloggers cannot claim their meals
- Health bloggers cannot claim their gym memberships
These costs are considered private in nature, despite being part of your blogging activity.
Pay As You Go (PAYG) Instalments
PAYG instalments allow you to pay your taxes throughout the year in smaller amounts. This can be a great way to avoid a large tax bill at the end of the financial year. You can choose to enter the PAYG system voluntarily, or the ATO may include you if your income reaches a certain threshold.
GST Considerations
If your annual turnover from content creation exceeds $75,000, you’ll need to register for GST. This means charging GST on your services and claiming GST credits on eligible purchases.
Superannuation
As a self-employed content creator, it’s easy to overlook superannuation. Consider making regular contributions to your super fund to secure your financial future. These contributions may also be tax-deductible.
Ready To Take Control Of Your Taxes?
Tax time can be confusing, especially for new social media influencers and content creators. The world of online business is exciting, but it’s important to understand your tax obligations from the start. This helps you avoid surprises down the track and keeps your finances organised.
If you’re unsure about your tax situation or have questions about specific deductions, you can consult with KPG Taxation registered tax agent. We will help you understand the Australian tax system and ensure you’re claiming everything you’re entitled to.
Our team of experienced tax professionals understands the unique needs of online businesses. We can help you maximise your deductions, minimise your tax bill, and achieve your financial goals.
