The modern age has brought with it a curious evolution of the digital space. It is now heavily content-driven, with many users looking for quality and reliable information. More than ever, it has become important for content to be as engaging and entertaining as it is informative.
This has led to a rise in people making a career out of or monetizing their internet hobbies, such as blogging or managing social media. Being a lifestyle blogger is becoming a legitimate profession in its own right, but there are still concerns about how the income is managed in terms of taxation.
As of now, the Australian Tax Office (ATO) offers very little guidance in the way of lifestyle blogging. However, there are ways to apply existing tax laws and regulations to the type of expenses bloggers incur.
First, you need to identify your blogging as a profession, not as a hobby
Hobbies are pleasurable activities taken on by individuals out of their own pocket; a business or profession is a source of income that enjoys tax reliefs and adheres to tax expectations in certain ways.
As such, you must begin with blogging as a business and not a hobby. This means that the government can expect income from direct fees, sponsorships, or membership fees, depending on your business model. Only when your blog is identified as a business can you start to think about claiming deductions.
What expenses are deductible?
Internet-related expenses, such as money spent on hosting, domain names, software, music, and imagery, can be claimed in a tax deduction. A portion of your home internet costs is also deductible if you run your blogging business from home. If you work in a dedicated office away from home, the entirety of your internet costs can be claimed.
Computer equipment of up to $1,000 can also be claimed as indicated in a guideline released on 1 July 2019. This can include things such as webcams, computer monitors, laptops, and so on. Communications equipment, such as phones and phone bills, can also be claimed if they are used specifically for the business.
Home and office costs are deductible too
Whether you run your blogging business from a dedicated office or your home, you can claim part of the rent or mortgage interest on your home as part of a tax deduction. Make sure to claim an appropriate portion compared to the overall size of the property, as the ATO is strict on these claims.
A part of your household bill—electricity, water, gas, and so on—can also be deducted if you work from home, especially if you denote a specific space in your home for the function of the blog.
Office equipment, supplies, and stationery are also tax-deductible. There is even a $20,000 instant asset write-off for furniture such as chairs, desks, and filing cabinets.
Marketing costs can be claimed as well
Advertising, paying for photos, music, or video licenses, and web and logo design can also be claimed in a tax deduction. SEO, promotional giveaways, and hiring services that are essential to your business, such as photographers and accountants, are also deductible.
What can’t I claim?
If the focus of your blog is travel, you will likely not be able to claim overseas journeys as part of your deduction. In that same vein, food bloggers cannot claim their meals, and fitness bloggers can’t claim their gym membership. The ATO still counts these activities as personal expenses that are domestic in nature.
As with any business endeavour, it is important to find ways to reduce your costs in every legal way you can. Knowing what you can and cannot deduct from your taxes is a great way to cut costs and turn better profits. It can be complex, but it is definitely worth it.
If you’re looking for an accountant for your online business, send us at The ECommerce Accountant a message. We have the expertise needed in the digital age to help you minimise your taxes and increase your profits!