These days online influence and creativity can translate into sweet, sweet income, which means Australian influencers and content creators probably need to brush up on their tax obligations. We know that Australian Tax Office (ATO) regulations probably isn’t your jam, so here are tips on how to navigate the tax labyrinth for those with unique income streams.
Tax Considerations When Hobbies Become Hustles
Profit = Business
According to the ATO, once your online activity generates profit, you're in business. And with the content creator market expanding to a projected $30 billion globally by 2025, this transition happens quicker than ever.
GST Registration
Crossing the $75,000 in earnings per financial year mark? You're in GST territory, necessitating registration and regular Business Activity Statement (BAS) submissions.
The Spectrum of Influencer and Content Creator Income
Cash and Contra
Beyond cash, your income includes the market value of products, trips, and even experiences gifted to you. Remember, if it's for promotion, it's taxable.
Stats Insight
Nearly half of influencers and content creators tend to underreport non-cash compensations like gifts and sponsorships.
Deductible Expenses: The Influencer's Edge
Business vs. Personal
Only expenses directly linked to content creation are deductible. That selfie stick might be claimable, but only if it's for your vlogs, not your vacation. Remember, in business, record keeping is essential.
ATO Audit Risk
Influencers and content creators who claim personal expenses inappropriately are at risk of being audited or even receiving financial penalties from the ATO.
The ATO's Digital Hunt
Data Crossroads
With advancements in AI, the ATO now uses sophisticated algorithms to match declared income against digital footprints. If platforms like ByteDance or Meta report your income, the ATO knows.
Influencer Crackdown
There's been a 20% increase in ATO audits targeting digital content creators over the past year. Back in 2023, ATO Assistant Commissioner Tim Loh warned that, ‘with tax time just around the corner, if you are bolstering your income with new activities, make sure all your records are up-to-scratch.”
“This could be anything from animal breeding to earning income through digital platforms, such as ride share or food delivery, or even online content creation, like social media influencers,” he said. You’ve been warned!
Beyond Tax: Compliance in the Digital Age
It’s not just the ATO who has been coming down hard on creators. Other Australian Government bodies are taking steps to regulate the influencer and creator economies, while both companies and creators are becoming more legally savvy.
Ad Transparency
With the ACCC tightening regulations, the requirement for clear #ad or #sponsored tags has never been more critical. Non-compliance? That can attract fines up to $220,000 per post!
Contractual Clarity
Influencer agreements are not just good practice; they're your safeguard in disputes over income or deliverables. Be sure to read any contracts you enter carefully, and if you’re getting into some big deals, it might pay to consult with a lawyer knowledgeable in the field.
Strategic Moves for Influencers and Content Creators
Ok so enough of the scare tactics. Let’s look at a few ways to succeed in the creator economy.
Digital Bookkeeping
Leverage technology for real-time income and expense tracking. Automation tools have reduced errors in tax filings by 30% for tech-savvy content creators.
If you’re making money from various sources and are sending out regular invoices to different suppliers, it might be time to explore a system like Xero to manage your business.
Tax Planning Strategies
Early engagement with tax professionals can tailor your strategy, potentially saving you 15-20% in taxes through legitimate deductions.
If you’re starting to earn good money, either solely through your influencer activity or because it’s adding to your existing income, you might want to consider tax planning strategies for high-income earners .
Start Thriving in the Tax Terrain
Remember, you’re not just influencers and content creators, you’re a legitimate money-making business too! With each post or video potentially adding to your taxable income, understanding and adapting to these financial nuances isn't just about compliance; it's about thriving in the vibrant, ever-evolving world of content creation. Reach out to our Melbourne accountants via the form below. Or if you're looking for representation to maximise your income as an influencer or creator, check out our clients SKG Media .
Disclaimer: The information in this article is intended as general information only and should not be considered as advice on any matter and should not be relied upon as such. This information has been prepared without considering any individual objectives, financial situation or needs. You should therefore consider the appropriateness of the information before acting or seek advice before making any financial decisions.
