Every year, more and more Australians are making their money through social media sites like Instagram or streaming platforms like Twitch, Patreon and Onlyfans. Whether it’s a side hustle, a hobby that got big, or a whole way of life – the online gig economy is here to stay.
Yet not everyone realises that this money is taxable income. The ATO has made it clear they’ll be cracking down on these platforms this tax year, so the skilled tax agents at Ezytaxback have put together this quick guide to help you from getting caught out.
The ‘Instagram Tax’ is a very real thing, so you should start keeping records.
While the name might initially elicit a chuckle or a raised eyebrow, the Instagram Tax is the name given to a very real piece of legislation that was introduced by the ATO in 2019.
If you earn over $600 via social media in a financial year, it’s no longer considered a hobby. You need to pay tax on the income that you earned. If the income is consistent, you may even need an ABN. Those earning over $75,000 a year will need to register for GST and BAS statements.
A social media influencer is someone with a large social media following who leverages their reputation and influence to market products and services. Influencers usually earn income in several different ways, including sponsored posts, downloadable digital products, podcasts, and affiliate marketing.
Though it takes its namesake from the photosharing app, the Instagram Tax applies to any income made through any social media platform. This includes endorsements, sponsorships and even non-cash benefits.
This last point is crucial, because successful influencers often recieve plenty of free products from the brands that they promote. While you’re not required to declare the occasional gift, a constant stream of untaxed free stuff will definitely raise alarms with The ATO.
This is why it’s so crucial to keep good records of every cent that you make and every product you receive so that your tax agent has a clear idea of your income. Otherwise, you could be heading for big trouble .
Be smart about your deductions, especially if you’re a lifestyle blogger.
The best way to legally reduce your payable tax is through tax deductions. And as a blogger, a streamer or an influencer, there’s plenty that you can deduct. This includes:
- Equipment & Office Furniture like computers, desks, desk chairs, stationary etc.
- Ongoing Operational Expenses like internet, phone bills and electricity (if you run things from a home office)
- Advertising & Promotion Costs like renting a domain name, advertising costs and search engine optimisation (SEO) services
- Financial Admin Expenses like monthly Xero subscriptions etc. You can even claim the cost of visiting your tax agents!
Depending on your niche, there may even be other things you can claim. The best thing to do is consult a registered tax agent like Ezytaxback, as deductions can be pretty hard to get right when you’re doing it DIY through MyGov.
The golden rule of deductions is that it must be a business expense. Unfortunately, this means you generally can’t claim expenses related to the topic you post about. Although you may make income off of sharing your experience with something, the ATO still considers those experiences to be private or domestic in nature.
For instance, a health blogger can’t claim their gym membership, and travel bloggers can’t claim plane flights. You may make thousands of dollars off of a popular Youtube Channel where you review different frozen pizzas every week. Unfortunately, you still can’t claim the pizzas.
Popular streaming platforms like Twitch and Onlyfans will soon share their data directly with The ATO.
One of the most popular forms of earning online income is streaming through platforms like Twitch, Patreon and Onlyfans.
Individuals use these platforms to stream original content to their subscribers, who pay the individuals a monthly fee for the privilege. The streaming services then take a small cut of these earnings as a hosting fee, though the exact amount differs between platforms. In this respect, it’s very similar to the way that other sharing economy apps like Uber or Airtasker operate.
You might have heard recently that these companies – Menulog, Airbnb and the like – have been targeted by The ATO’s data-matching program, which uses third-party data to catch out tax dodgers. These companies may soon have to provide data directly, making it all but impossible for users to hide any income earned through these platforms.
What you might not know is that streaming services like Patreon, Twitch & Onlyfans are currently also subject to third party data-matching programs by The ATO. And from the 1st of July 2023, they’ll be forced to provide all their data directly. This means that The ATO can see every dollar you make from streaming – it’s not worth trying to hide anything.
It also means that they’re far more likely to pick up on small mistakes or oversights, which are very easy to make on your own. Generally, it’s always better to file with a registered tax agent, to make sure that you’ve got it right.
We hope this tax guide has been useful to you. Working out your taxes on your own can be confusing and intimidating, and not everyone can afford a personal accountant.
Instead, using a registered online tax agent like Ezytaxback makes the process fast, affordable and super easy. What’s more, we guarantee a maximum refund every time. Our tax experts are here to help.
The information in this article is of a general nature. It does not take your specific needs or circumstances into consideration. You should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.