As a working professional in Australia, you need to pay tax, even if you are a well-known influencer who generates income by project rather than with a monthly salary. Suppose you are a regular, non-Instagram famous citizen, your company guarantees the correct amount of tax is withheld from your salary by presenting you with a tax declaration form that they file on your behalf. You sign, they transmit, and you're off to work and pay your taxes. However, this procedure is a bit more complicated for influencers, and it may become a little messy if one isn't careful.
According to a recent study done by a mobile phone provider, 86% of young Australians aspire to be influencers. Travel blogging was chosen by 46% of them aged 18-24 as their full-time job choice, followed by food blogging at 16% and fashion blogging at 9%. However, along with the desire to become Insta-famous comes the responsibility to pay taxes and keeping the Australian Taxation Office (ATO) in mind.
How Do You Pay Taxes as an Influencer?
In Australia, regardless of whether you are an artist, star, athlete, or influencer, you must pay income tax. As part of the recently implemented 'Instagram Tax,' influencers must apply tax on income earned via sponsorships and endorsements, including non-cash incentives. The recently discovered flaws in the previous method prompted this modification.
Influencers would be unable to discount this income under the new tax system. They should include everything in their taxable income. According to Financial Review, there has been evidence of influencers reducing their assessable income by licensing their popularity or image to third-party businesses and organizations. This allowed influencers to claim a loss and reduce the proportion of tax due since their image is utilized for-profit and they only receive a small percentage.
What Can You Do to Manage Your Taxes?
Influencers, like all other Australian citizens, must adhere to the ATO's Individual Income Tax Rates. However, while filing a tax return, influencers may specify specific deductibles. These are expenditures that are directly connected to an influencer's job. They may be contested as deductions as long as the influencer was not compensated and used their own money for it. It is also essential that they maintain a record, including its cost. These items include but are not limited to the following:
Computer and camera equipment (as long as the camera is for work only)
Communication equipment (phones)
Out-sourced design and advertising
Keeping a record for all of these transactions requires meticulous accounting, especially if many companies compensated you. However, to keep yourself from getting lost in the process, learn the basic guideline—everything that is not utilized personally, domestically, or for pleasure is considered a work expenditure.
Why Is It Important to Pay Taxes Accurately?
Managing your taxes as an influencer is, without a doubt, a somewhat more complex task, especially without the assistance of a competent accountant familiar with the industry. Inaccurately filing a tax return, on the other hand, may have severe repercussions for you. Therefore, it is critical to correct any errors or incorrect information as quickly as feasible.
The ATO has the authority to levy administrative fines on individuals who make false or misleading representations to withhold sums to the ATO or fail to fulfill tax obligations. Though the fines range from $110 and $210, depending on the offense, one may be required to pay 5 to 20 times the penalty unit.
Work With an eCommerce Tax Accountant
Personal tax can be complex, especially if you have a non-traditional source of income and have to file on your own. A mistake can have massive repercussions as well! Fortunately, you don’t have to be alone in this. A skilled accountant can make sure you are honestly reporting your income while also specifying all the deductibles you’re eligible for.
Are you having a hard time working on your income taxes? At The eCommerce Accountant, we can provide you with the best assistance you need to make your tax journey as smooth as possible! Drop us a message and work with a reliable eCommerce tax accountant today!