Every year, more Australians are ditching the office and making their living on platforms like Instagram, Facebook, Tiktok, and Patreon.
While for some people, these platforms provide a bit of extra ‘pocket money’, for others, being an influencer pays massive dividends into the six and sometimes even seven figures every year.
But whether you’re making a few hundred dollars or tens of thousands from your social media profiles, the ATO will still expect you to pay taxes on your influencer income at tax time.
Let’s take a deeper look at what this might mean for you.
How much tax do I have to pay as an influencer?
As a general rule of thumb, any income over $600 in a financial year that is generated through Instagram, Twitch, TikTok, Patreon or any other digital platform is taxable.
Even if you see your socials as just a fun hobby, the minute you start posting or streaming with the intention of making money, you’re considered to be running a business in the eyes of the ATO. If your income is consistent and of significant value, you may even need to get an ABN.
The amount of taxes you’ll pay depends on a number of factors such as your income bracket, any other investments or financial obligations you may have, and the amount of business-related deductions you have claimed for the year.
What tax deductions can I claim as an influencer on Social Media or Instagram?
Typically you can claim any item that you have purchased specifically for developing your Instagram or TikTok platforms.
These might include:
- Computer, microphone, camera, and lighting equipment
- Design and advertising expenses
- Online courses and subscriptions
- Professional membership fees
- Products and props required for content creation
- Travel expenses
This doesn’t mean that you can live a lavish lifestyle to promote your channel and just claim your living expenses back on tax. You can only claim back the business-related portion of your expenses.
So don’t book that 5-star holiday and expect to have the ATO repay you in full at tax time. If you work 2 out of the 7 days you stayed at the hotel, you’ll only be able to claim expenses for the 2 days you were working.
And even for those expenses, you need to be able to prove to the ATO that they were necessary and strictly for business purposes. Especially the margaritas and nightclub admission at 3am!
If you’re confused about what you can and can’t claim as an influencer, working with a registered tax agent can help you determine what you are expected to declare.
Do I have to pay taxes on gifts I receive as an influencer?
We’ve all seen pictures of Instagram influencers surrounded by expensive handbags, clothes, and other goods that brands have sent them to promote. ‘They’re so lucky,’ we think, ‘they get thousands of dollars worth of stuff for free!’
Maybe not. Because according to the ATO, physical goods received in exchange for other goods or services are considered a bartering exchange.
Just like cash transactions, bartering exchanges are assessable and deductible for income tax purposes. Bartering exchanges can also include intangibles such as free accommodation or event entry, use of a car, or free travel.
That doesn’t necessarily mean you’re required to declare every small freebie you may receive from fans or commercial partners. But if you receive goods of substantial value, the ATO considers that part of your business income, and will expect their share of its value at tax time.
How to file your taxes as an Influencer
Whether you earn influencer income from Twitch, Instagram, TikTok, or any other platform, it’s essential that you keep records of your income and expenses. If you receive gifts and other forms of free perks, it’s a very wise idea to use a diary to note who the gift was from, when it was received, and what it was for. Because if the ATO ever chooses to audit your tax records, you don’t want to be caught out.
Another wise idea is to lodge your influencer tax return through a registered tax agent. Our team here at National Accounts understands the particular nature of earning income on Instagram, TikTok and other online platforms, and can help you maximise your tax benefits when you lodge your tax return.
Get in touch using the link below to see how we can help take the stress out of tax time.
