Some people earn a living by advertising brands and products on social media, and they are called “social media influencers.” If you are one, you should know that you still need to comply with the tax obligations required by the ATO (Australian Taxation Office). You might find the tip below helpful in dealing with this tax concern.
What Are Social Media Influencers?
Social media influencers use social media sites such as Facebook, Instagram, Twitter, YouTube, Snapchat, and the likes to engage with their followers. The influencers create content by taking photos and videos on their social media accounts. Content is often marketed on brands, products, or events.
Is “Influencing” Considered as a Business?
You might be confused as to whether your career as an influencer is considered a business or not. To help you understand, ticking this checklist means running a business in the eyes of the ATO:
You are doing activities for commercial purposes
These types of creative works occur regularly
You profit from these activities
These activities are done in a business-like setup
The Influencer Tax Obligations in Australia
Influencers on social media can get paid in different ways. Sometimes they are paid by the brands they promote in their content. Other times, they are paid by the brands only to feature their products in the content. In some instances, they are paid both by the brands and the brands' affiliates.
You will need to assess how you are paid for your social media content. If the brands pay you, then it is straightforward. You are paid as an employee, meaning that you are an employee beneficiary. The payments you receive from the brands will be taxed as employee benefits.
If the brands' affiliates pay you, you must determine if it falls under the commercial agreement. If it does, you are considered the common contractor of the brands and the brands' affiliates. If you are a common contractor, your payments will be taxed as common commercial income. You will be required to pay the same tax obligations that уour contractors are obligated to pay.
Other times, brands pay with non-cash benefits, such as goods and services.
Tax on Non-Cash Benefits
You will also need to pay tax obligations on the amount of appreciation for these goods or services you get. The appreciation is the difference between your acquisition cost and the current market value of the goods. The acquisition cost will be determined by the lowest market value of the goods from the time of its acquisition.
The ATO will base the tax obligations on the market value on the date you received the asset. You will also need to provide evidence of the market prices of these assets.
Claim Tax Deductions
Because you have your own business, you have the power to claim tax deductions. As an influencer, here are just some of the expenses that you can include in your claim for tax deductions:
Your Equipment Cost: It includes the gadgets you use to produce your deliverables, such as your phone, social media platform subscriptions, and computer.
Your Internet Fee: You need to keep track of your internet usage. The ATO will base your tax obligations on your internet usage for the year.
Your Mobile Phone and Plan: You can claim the portion of your mobile phone bills that you will use for your business purposes.
Branding-Related Costs: You can claim your costs for creating logos, designing your website, and creating a profile photo.
Other Expenses: You can also claim the cost of your business-related travelling, hiring photographers or videographers, and the like.
Social media is a great platform to show off your creativity and personality. It can also be a great platform to gain fame and money. Remember that it may still be considered a business even if it is not your primary source of income. Whether you received cash or non-cash benefits, you must still declare it to the ATO. You can only enjoy the benefits you receive when you comply with your business's tax obligations.
An influencer accountant is what you need to ensure you do not miss out on anything important. Book a free strategy session with us at The ECommerce Accountant today, and we will show you how we can minimise your taxes and increase your business profit.