Are you thinking about starting an OnlyFans account?
Whether you’re just looking to earn some extra cash on the side, or are planning to make bank and retire, it’s important that you understand your tax obligations. Because the ATO is watching!
Creating content on platforms like OnlyFans, Patreon, or Twitch may seem like just a bit of fun. But if you don’t file your taxes correctly, you will face financial penalties when the ATO catches up with you.
If you’re not sure how to organise your OnlyFans tax return, working with a professional tax agent can help you avoid common pitfalls and minimise the amount of tax you have to pay.
Do OnlyFans creators have to pay taxes?
Yes. The income you make is taxable whether you make it in salaried employment, the gig economy, on social media, or from subscription platforms such as OnlyFans.
Basically, it doesn’t matter where your income comes from. If you earn it, the ATO needs to know.
Even if you consider your OnlyFans account to be a hobby, the ATO might not agree. The line between hobby and business can feel a little blurry, and can depend on several factors. But as a general rule, you’re considered to be running a business if you do any or all of the following –
- Post content with regularity
- Repeat similar types of activities in your account
- Keep records of income and expenditure
- Plan and organise your content in a businesslike manner
A big part of what makes your account a business is your intention. If you intend to make a profit, then you are running a business.
Even if you are not profiting yet, or only making a small amount of profit, you still need to report it to the ATO. If you’re making a substantial profit, then even more so!
How does tax work for an OnlyFans creator?
You will need to include your OnlyFans income when you submit your individual tax return every year. That income is then combined with your other taxable income, and taxed at your marginal rate.
But if you make less than $18,200 in a tax year, you won’t need to pay income tax on earnings up to that amount. However, anything above that tax-free threshold is subject to income tax.
It’s important to note here that OnlyFans does NOT withhold taxes from your pay, nor does it organise your taxes for you. You’re responsible for your taxes.
To ensure you don’t get a nasty shock at tax time, it’s a good idea to put aside a portion of your income in accordance with what you’re expecting to pay based on your earnings. You can see which tax bracket you fit into at this page.
If you’re anticipating a hefty tax bill, or would just like to stay on top of your tax debt throughout the year, you can look into making Pay As You Go instalments.
When you register for PAYG, the ATO will send you a quarterly tax bill that’s estimated based on your earnings for the previous tax year. You can adjust the amount you pay as you need to. It’s a good way to keep on top of your tax debt throughout the year, so you’re not faced with a large bill in July.
Do I need to get an ABN for my OnlyFans page?
Running an OnlyFans account for profit is considered a business in the eyes of the ATO. So you will need to register for an ABN. Applying for an ABN is easily done online.
When your ABN is issued, it’s registered to you and connected to your tax file number. From there you can link it in your myGov account so you always know if you have any outstanding obligations to fulfil.
Once you’re registered for an ABN, you’re all set to start earning income under it.
How to reduce your OnlyFans tax
One of the good things about running a business is that the ATO lets you offset your business purchases against your taxable income, reducing the amount you have to pay at tax time.
That means a lot of the things you have to buy to create content can potentially be claimed back as a business expense, such as –
- Cameras, microphones and lighting equipment
- Costumes, toys, and other props
- Make-up and beauty treatments
- Airbnb properties used for filming
- Photographer, make-up artist, graphic designer, and video editor fees
But here’s the important thing. Just because you wore your new lingerie once on an OnlyFans photo shoot doesn’t necessarily mean it can be claimed as a business expense. If you use items in your own personal life as well, you can only claim the portion used for business purposes.
That’s done by estimating the percentage of business vs personal use. For example, you might buy $1,000 worth of makeup with the intention of using it on video and photo shoots. But you apply that makeup to go about your daily life as well.
So you might estimate that out of the $1,000 spent, 75% is for personal use and 25% is for business use. In that case, you would claim $250 on your tax return.
It’s important to keep receipts and a detailed log of your expenses. So if the ATO ever audits your business, you have a record of what you spent, when you spent it, and for what purpose it was used.
How to file your OnlyFans taxes
If you’re unsure of how to set your business up, what you can claim, and how to do your tax return, it’s a good idea to work with a tax agent.
At National Accounts, we’re familiar with OnlyFans as a business model, and can help you stay compliant with the ATO at tax time. We can also advise you on strategies to maximise your return every year.
Simply get in touch using the link below to see how we can help take the stress out of tax time.