Social media can be a great way to earn a little side hustle or even make into a career. There are many platforms on which you can earn income social media, including YouTube, Facebook, Instagram, Snapchat, Twitch, Twitter, OnlyFans, and (especially since the pandemic) Tiktok.
Since the last decade, social media influencers have been increasing, and more and more people are quitting their day jobs and becoming full-time influencers. With some earning more than $20,000 per story.
However, you do need to be aware of the impacts this side hustle can have when it comes to preparing your tax return and declaring this income. The money you receive from advertisers or brand sponsorships is not necessarily tax-free income.
Believe it or not, all Australian influencers must pay tax on all income made through brand sponsorships including non-cash gift items. Under Australian tax rules, influencers. bloggers running a business and receiving cash or non-cash benefits in return for their services including appearances must include this as assessable income.
TIP: START KEEPING RECORDS. EVERY PRODUCT YOU RECEIVE AND EVERY BIT OF INCOME.
The "Instagram Tax" is the name given to the ATO legislation in 2019. So if you think no one watching. Think again.
The taxation guidelines aren't black and white about the amount you earn and when you need to pay tax but if they can see that you have earned a steady flow of income from both non-cash or cash benefits then you will need to include these in your tax returns. If you receive a one-off gift and your use of social media is only a hobby then you do not necessarily need to report it. However when it no longer becomes a hobby and you are receiving a constant stream of items or cash benefits in exchange for social media posts and promotions then that is when it is considered an income stream. This is when you would consider having an ABN or registering your social media name as a business.
If you earn over $75,000 a year will need to register for GST and prepare business activity statements.
What is considered a non-cash benefit?
* Free Clothing
* Free Appliances
* Free makeup and cosmetic products
* Free holidays and accommodation
* Free event entry
* Free Jewellery
* Free use of a car
What are examples of tax-deductible expenses for influencers?
* Stationery
* Cameras, lighting, and audio equipment
* Office equipment- Desks, chairs, computers
* Marketing and website development Costs - advertising, domains, website maintenance, SEO services
* Financial Expenses - Accountants fees, Xero subscriptions
MOST IMPORTANT TIP: FINDING THE RIGHT ACCOUNTANT
Lodging your taxes correctly can be a complicated thing especially if the accountant you use doesn't understand your line of work. It's crucial to find the right accountant that understands social media and the work life of an influencer and everything that is involved. If they aren't up to date with trends and don't understand the new tax regulations you could end up paying more tax than you need to. Our accountants at Dolman Bateman are trained in social media influencer accounting and understand all the tax laws around this. They also specialise in E-commerce and understand what is like to have income from all parts of the globe and to lodge taxes correctly. As you know most influencers also have an online business or they are trying to sell their own line of products using their name. Our accountants specialise in helping people set up online businesses and running a smooth E-commerce business to success plus having all your accounts in order.
Don't think you can get away with not lodging your taxes. THE ATO IS MONITORING.
The ATO has introduced a data matching program and is now monitoring apps related to cryptocurrency trading, Airbnb, and streaming apps that use third-party data to catch people trying to dodge taxes. At the moment it uses third-party data but soon they may have to provide data directly making it impossible for users to hide income earned. This means programs like Only Fans, and Twitch may be forced to provide all their data directly as well.
If you are a social media influencer and need assistance with your tax returns please give us a call on 9411 5422 or book an appointment with one of our experienced accountants and they can provide you with the correct advice.
This blog has been prepared for the purposes of general information and guidance only. It should not be used for specific advice or used for formulating decisions under any circumstances. If you would like specific advice about your own personal circumstances, please feel free to contact us on 02 9411 5422. We can help make sure the right method is used to give you the maximum possible tax deduction associated with any of these methods.
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