If you’ve spent any time on the wildly popular platform TikTok, you probably know how easy it is to lose hours in an endless scroll. Those short-form videos are so snackable that we just want more and more!
But TikTok isn’t just a place for kids to share dance videos. It’s a powerful tool for building an audience that can be monetised. Brands and content creators alike are using the platform not only to promote themselves, but their products as well.
Just like other social media platforms such as YouTube, Twitch and OnlyFans, where there’s money to be made, you can bet the ATO is watching.
It doesn’t matter if you’re sharing videos for fun or profit. If you’re a TikTok creator and are starting to earn some money, you need to be aware of your tax obligations.
If you’re not sure how to organise your TikTok tax return, or want to make sure you do it right, it’s a good idea to get help from a professional tax agent.
Do you have to pay tax on TikTok income?
Simply put: yes. Money is money, and the ATO doesn’t care what method you use to earn it. Even if you’re doing TikTok on the side, any money you earn from TikTok is potentially taxable.
This means that any money you make through sponsorships, endorsements, merchandise or even gifts should be accounted for on your tax return.
So it’s really important to keep proper records of your earnings. Especially if you’re getting it from multiple sources. Whether you use cloud bookkeeping software like Xero, an Excel spreadsheet, or something in between, staying on top of your incomings and outgoings will make things much easier at tax time.
Defining whether your TikTok is a business or hobby
You may feel like your TikTok account is just a bit of fun – so why should you pay tax on it?
If you’re getting the occasional small gift from a fan, then it’s likely the ATO won’t see that gift as taxable income. But here is where it can get a bit murky. If you’re actively asking for gifts, and/or receiving gifts of substantial value, then you’re creeping into business territory.
Essentially, you’re seen as running a business if you:
- Actively seek to improve your following.
- Post with the intention of financial benefit.
- Use your profile to promote goods or services offline.
- Keep records of your income and expenses.
- Spend money on improving your channel (such as tools and software).
Do TikTok influencers need an ABN?
If you are using your profile as a hobby (ie: not meeting the criteria above), then you probably don’t need an ABN.
However if you’re posting on TikTok with the intention of making money, and are carrying out business-like activities (such as posting regularly, growing your channel, keeping earning records etc), then you should get an ABN.
Because essentially, you’re running a business. Especially in the eyes of the ATO!
When your business is going well and you are earning more than $75,000, then you are required by law to get an ABN and register for GST.
Getting an ABN is easy and free. You can apply online and get your ABN the same day.
Claiming expenses for your TikTok account
If you’ve just realised that you’re considered to be running a business and that your TikTok income is taxable, I’ve got some good news for you. As a TikTok creator you can deduct your running costs from your taxable profit at the end of the financial year. Meaning you pay less tax!
However it’s important to be aware of what is considered a legitimate business expense, and what is not. This can get tricky, because creating content on TikTok often means paying for a variety of things that aren’t traditionally business-related.
Things like clothes, makeup, and props are not necessarily deductible at tax time. To deduct an expense, it must have been purchased exclusively for use on your videos. For example, if you buy a new dress and wear it once on a video, and then add it to your everyday wardrobe, it’s not a taxable business expense.
But if you buy a costume to wear on a video that you wouldn’t usually wear in everyday life, that is likely to be considered a business expense.
For TikTok content creators, typical business expenses are things like –
- Laptop computer
- Editing software
- Camera and lighting equipment
- Transport to your filming location
- Props and set design materials
- Home office equipment
- Outsourced design and advertising expenses
- Education such as video or editing courses
Do I have to declare gifts I receive from my TikTok fans?
The ATO is cracking down on Australia’s influencer industry with a special focus on gifts and non-business deductibles. If you receive non-cash benefits such as goods to promote, hotels and travel perks, or other kickbacks of substantial value, you can expect the ATO to scrutinise your tax return.
That’s why it’s advisable for TikTok creators and other influencers to work with a registered tax agent that understands TikTok taxes.
How to do your TikTok taxes
Given the evolving nature of social media and its income-generating possibilities, it’s important to have someone in your corner that is clear on your obligations, and stays on top of any changes from the ATO.
National Accounts are TikTok taxation specialists with years of experience working with content creators on TikTok, YouTube, OnlyFans and other social platforms. We can help you keep your income and expenses up to date, so you can claim the maximum benefit at tax time.
Get in touch using the link below to see how we can help take the stress out of tax time.