Blogging has been a lucrative industry for over a decade, and within the last few years, we have all been witness to the exponential rise of the influencer industry. Successful influencers leverage their following to earn millions of dollars a year, go on paid vacations, eat free food, and get sent all the brand new products and gadgets.
Sounds like a dream, right?
On the other side of the dream is a bit of reality. The Australian Taxation Office (ATO) obliges all working citizens to pay tax—and social media influencers are not exempt from that rule. Of course, successful bloggers and influencers can easily hire accountants to do all the dirty work, but as self-employed workers who bet on themselves, they still need to be scrupulous when it comes to paying taxes!
How Do Bloggers and Influencers Pay Tax?
The ATO introduced the Instagram Tax on July 1, 2019. It states that all income made through sponsorships and endorsements is considered taxable income. As such, if you earned a cumulative $600 as an influencer, then you must follow the Individual Income Tax Rate.
Managing taxes is a bit more complicated for bloggers and influencers than for a regular rank-and-file employee. Meticulous bookkeeping is needed to account for multiple revenue streams, such as brand collaborations and sponsorship deals. The good news is, influencers have a lot of leeway to work with when it comes to claiming specific deductibles.
What Can Bloggers and Influencers Claim?
When it comes to taxes, there is one golden rule: document everything. Being diligent about having a receipt for all expenses will shrink your tax obligation further and further. All self-employed workers can claim the following deductibles:
Home office expenses
If you’re working from the comfort of your own home, everything you use for your business or brand can be claimed. The cost threshold for computer equipment is $1,000 per item, including your laptop, router, digital cameras, and other accessories like your keyboard and mouse. Office furniture, such as your computer chair, desk, and filing cabinets, as well as consumable office supplies, like printing paper and business cards, can be claimed through this too.
If you have a dedicated home office, you can claim part of your mortgage interest or rent, as well as your internet and other utility bills, as a tax deduction. Just make sure you’re claiming an appropriate percentage of your overall property, and as always, keep those receipts.
Branding-related expenses, such as professional photography, blog design, ads, search engine optimisation (SEO) services, and logo designs can be claimed, too. Website-related costs include hosting fees, blogging software, and domain name registrations.
All bloggers with some measure of success should separate personal and professional communications expenses. It’s best to establish a separate phone line to generate a phone bill that can be claimed as a tax deduction.
Hassle-Free Tax Management for Influencers and Bloggers
When you’re self-employed, there are two things you should keep in mind: strict segregation and thorough documentation.
Keep business away from the personal; this includes bank accounts, phone lines, and contact information. A firm delineation means your accountant will not have the additional work of sifting through your personal expenses.
Document everything—not just expenses, but all the perks, too. Gifts and freebies of substantial value should be included on your tax return. When in doubt, your accountant will know the answer.
Bloggers and social media influencers all seem to be living the high life of a lot of money and getting things for free. As Australian citizens, though, when the ATO calls, you have to answer. Diligently documenting all cash coming in and out is only one of many complexities involved with being self-employed, so it’s best to look for an accountant you can trust to manage all your taxes.
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