Tax Tips For Social Media Influencers

A social media influencer like a YouTube star or an Instagram celebrity has become popular these days. If you are earning quite a good amount, then you should understand the tax implications that come with your online success.

This blog will highlight the tax tips you need to know so that you can declare the returns and have a tax record to prove your success as an influencer.

Figuring Out If You’re A Business,

Before understanding the tax implications, you have to figure out if you’re a business owner or not. If you have:

• An intention to make a profit 
• Repeated activities that are carried out in a business-like manner 
• And deciding to be in the business

If you checked all three points, then you must file for the tax returns to avoid any trouble in future.

Declaring Income 

You must declare any income you earn through your online business. You can see here the ways of income and benefits that you might be earning as an influencer in Australia.

• Cash income

Every kind of cash income that you receive directly or through one-time payments, recurring sponsorships and earnings from direct viewer contributions. It also includes the money you get from collaborations and sponsorships and the payments you receive from posting brands and their advertisements. 

• Non-cash benefits

You might have received income in the form of free products, services or experiences in exchange for promoting a brand. It also comes under taxable income and you need to declare it. 

All these free services and products come under assessable income including gifted merchandise, travel experience, and free services.

• Gifts and bartering

Any gifts or goods you receive in exchange for the service you provide need to be included in the income tax return. It’s particularly essential for the gifts you receive that have substantial value. Though they are gifts and you got them for your service, you need to declare them. As these gifts are of a significant amount, you shouldn’t ignore them in declaring your taxable income. 

• Endorsements and sponsorships

If you endorse and sponsor any brand through your online platform, it also comes under taxable income. You need to declare both monetary compensation and the value of any associated benefits must be declared. 

• Affiliate marketing earning

Any income generated through affiliate marketing where you receive a commission for sales generated through your unique links in your online posts is considered as a part of assessable income.

• Donations

Receiving donations and crowdfunding contributions are the amounts that come under taxable income. You need to declare them to avoid the assumption of receiving free income. 

• Event appearance fees

As part of your influencer activities, if you attend any event to promote a brand, you will receive payment. And that amount needs to be declared in your taxable income. 

• Online courses and subscriptions

If you teach an online course and subscription-based content, you will generate revenue. The income you earned via the mentioned sources needs to be reported in the income tax return. 

• Travel and accommodation benefits

The income you generate through the travel and accommodation benefits provided by brands for promotional purposes also comes under taxable income. It comes under the part of assessable income. 

• Any other forms of compensation

Other than the mentioned, if you receive any kind of monetary or non-monetary related to your social media activities needs to be declared. 

The simple rule is if you receive any income that you make needs to be reported - this can include: cash, tips, payments from YouTube or Twitch, products you’ve been given, appearance fees, and fees for licensing your content. You need to keep accurate records of your income and deductions 

How To Declare Income 

• As a sole trader you can declare all your income on your tax return 
• Refer to ATO’s income deductions and concessions page for more info on what you can claim as a social media influencer https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/deductions

Final Thoughts

If you are unsure of how to do the declaration and do not have proper knowledge, then you can always rely on a professional tax accountant to file your IT returns. Though it’s an investment, you will have correct guidance through your income and deductions so that you can plan well in future.