As the content creation industry continues to grow, platforms such as OnlyFans provide lucrative opportunities for Australian creators. However, running an OnlyFans business involves more than just uploading content it requires careful consideration of business structures, taxation, and compliance rules to ensure your earnings are maximised and protected.

This article outlines the key considerations for structuring an OnlyFans business in Australia, including the Personal Services Income (PSI) rules, the pros and cons of different business structures, and how to build a profitable, tax-efficient framework.

At National Accounts we represent several highly successful content creators in Australia usually averaging more than 40k in net profit per month. While most of content creators enjoy lucrative profit margins, greater control of their time and operate as their own bosses, many are faced with challenges of navigating complex income tax rules including PSI rules. PSI is the main catalyst which will impact the ability to feasibly restructure from a sole trader to a more appropriate entity structure. 

PSI rules are extensive and operate to limit the income tax benefit from income derived mainly from personal skill, appearance or labour.

What is all the fuss about PSI rules and why are they important we hear you say. Well as the main catalyst allowing you to restructure your business, setting up a new structure can save you tens, if not hundreds of thousands of dollars of income tax, separate legal liability, and create a more commercial appropriate environment for you to conduct your business operations.

So, what is PSI and what do I need to do to make sure it doesn’t prohibit me from restructuring my business?

Great question, the PSI regime, contained in Division 84–87 of the Income Tax Assessment Act 1997 (ITAA 1997), is designed to prevent individuals from reducing tax by diverting income that is mainly a reward for their personal efforts or skills into another entity.

When PSI applies: If more than 50% of your OnlyFans income is from your personal skill, appearance, or labour, it may be classified as PSI. For creators, this is usually the case.

Impact of PSI:

• Income is attributed back to you personally, even if earned through a company or trust.
• Deductions may be limited (e.g., you generally can’t deduct rent, mortgage interest, or payments to associates)

 

When PSI doesn’t apply: If you can demonstrate that your business is more than just “you” (for example, by employing staff, subcontractors, or generating significant non-personal income streams such as licensing, merchandise, or paid collaborations), you may pass the PSI tests and be taxed as a business.

Pass the “Results Test” (Primary Test)

• To avoid PSI, the ATO first looks at whether you pass the results test (s87-18 ITAA 1997)
• You need to be paid to produce a result (not just for time/effort), provide your own equipment/assets, and be liable for rectifying defective work
• In OnlyFans, this is difficult because payments are tied to subscriptions and personal interaction, not a deliverable “result.” Unless you restructure the offering (e.g, commissioned custom content with agreed outcomes), this test usually won’t be met

 

Pass One of the Other Tests

If you don’t pass the results test, you can avoid PSI classification by meeting one of the other tests:

• Unrelated Clients Test – You get income from two or more unrelated clients, via advertising or a business website (not via the same platform). OnlyFans usually means all income flows through one platform, so the ATO may argue it’s a single client source
• Employment Test – You employ others (or contract them) to perform at least 20% of the work or 20% of the income is paid to others to help deliver services. For example, hiring content creators, editors, marketing staff, or managers can help
• Business Premises Test – You maintain separate business premises (not your home), used exclusively for business, open and available to the public. This is rare for an OnlyFans model but possible if set up like a studio

 

Operate Your Business Through a Genuine Business Structure

Even if PSI applies, you can still demonstrate that you are carrying on a personal services business (“PSB”) if you meet the tests above. To strengthen the case:

• Use a company or trust structure
• Show commercial risk (marketing spend, subscription churn management, refunds, investments in software, branding, etc)
• Employ or contract assistants for editing, admin, marketing, or content creation.
• Develop intellectual property (“IP”) (branded content, merchandise, courses, community platform outside OnlyFans) – income from IP is not PSI
• Show that clients are paying for a business brand and system, not just personal effort.

 

Lastly, Diversify Your Income Streams

• If all income is from OnlyFans, it looks like PSI. If you also sell:

1. Merchandise
2. Digital products (e.g., e-books, courses)
3. Licensing of your content/IP
4. Paid ads or sponsorships
   then a stronger case exists that you’re running a business with income from assets and IP, not just personal services

 

To summarise, you can avoid your income being classified as PSI income by applying some of the following:

 

• Sell branded merchandise, digital courses, subscription tiers with value beyond personal engagement, or license content/IP
• Trademark business names, logos, characters, or storylines. Income linked to IP is not PSI
• Operate social media, websites, or e-commerce outside OnlyFans to show broader business activity
• Engage contractors or employees for at least 20% of work or income (e.g., editors, managers, marketers, photographers)
• Source clients outside OnlyFans (e.g., Patreon, personal site, sponsorships) to show multiple revenue channels
• Rent a dedicated studio/office separate from your home

 

PSI rules are vast, complex and can be difficult to navigate which is why it is crucial to the success of your business to seek professional advice today. At National Accounts we are experts in content creation and can assist you in reviewing your situation and how the PSI rules apply to you. Successfully navigating PSI rules can open the potential to restructure your business and achieve great outcomes such as:

• Separating legal liability
• Facilitate growth and improve commercial viability
• Pay lower taxes (25% corporate tax rate (for base rate entities))
• Allow profit sharing to immediate family and other contributors (such as spouse)
• Facilitate an investment/wealth creation strategy by effectively distributing profits or reinvestment into the business

Now that we’re discussed PSI rules and the benefits of successfully navigating them, what about which structure to use? Like most things, it depends. It depends on your personal and immediate family situation, your goals, your business operations, and so.

Picking the right structure is crucial to the success of your business, and, needless to say, is worth a chat to your team at National Accounts to consider which is right for you.

Starting off with Sole Traders, these are the most low-cost structures:

• Can be setup for close to nothing (register an ABN, consider insurances and few other bits and pieces and your business is up and running)
• However, no asset protection
• Unfavourably taxed at marginal rates (paying upwards of 45% + Medicare levy (2%)
• No profit sharing
• Ideal for those that are testing the waters and not very serious

As a sole trader, you really get what you pay for which isn’t much. 

Moving onto Companies, a great structure to operate your business under the right conditions: 

• Favourably taxed at 25% (if you’re a base rate entity)
• Asset protection
• Ability to retain protects (and pay them out via dividends when suitable)
• Facilitates growth and wealth creation
• Additional complexity and laws to navigate (Division 7A)
• Ongoing assistance and advisory services are usually required, adding to the compliance costs (important to consider the additional costs against the anticipated benefits to determine economic viability)

Trusts are also a great option under the right personal circumstances:

• If structured with a corporate trustee provides greater asset protection than a sole trader structure
• No ability to retain protects but can share income to the eligible beneficiaries of the trust (typically yourself and your spouse)
• Limited tax benefit where taxable income levels are high
• Additional complexity 
• Ongoing assistance and advisory services are usually required, adding to the compliance costs (important to consider the additional costs against the anticipated benefits to determine economic viability)

Moving onto some of the practical tips to gearing up your business to build a profitable framework. Some important issues to consider in creating a sustainable commercial business:

• Separating your business income and expenses by having dedicated bank accounts set up
• Consider setting up a business transaction account to receive all business income, and pay for expenses
• Frequently checking your businesses profit and loss, balance sheet, and cash flow reports. These are crucial reports that give usual information about the operational efficiency of your business and the life blood (cash! Cash is always king). Effective management of your business rests on your shoulders and your ability to execute important decisions that drive your business forward
• Consider ongoing professional advice from your accountant and advisor, usually a value-added service that can give you the confidence to take your business to new heights (or at the least give you peace of mind so you can focus on what your good at, running your business)
• Review your IP, trademarks, copyrights, non-disclosure agreements (“NDA”) regularly to ensure your business is protected from unauthorised distribution of your content
• Consider using content monitoring and takedown services
• Have a plan – sounds simple enough, but as the age of saying goes those who do not plan, plan to fail rings true here. Make sure you have a plan for the use of your businesses profit, to fund lifestyle, reinvest into your business, and fund a wealth creation strategy appropriate to your goals

Now for a bit about how the team at National Accounts can tie all of the above together and catapult your business to new heights. National Accounts are pioneers in the accounting, tax and advisory space for Content Creators in Australia, our team has over 30 years of experience navigating complex commercial and tax arrangements for our clients and offer you a wealth of knowledge that prove essential in the success of your business.

Reach out to the team today by visiting nationalaccounts.com.au and submitting an Apply To Work With Us form by clicking on “Work With Us”, alternatively you can call us during usual business hours on (08) 8166 6705. While we’re based in Adelaide, South Australia, we continue to service the needs of the Content Creation community nationwide.

Reah out today! We look forward to meeting you.

Jonathan Perre, Partner – Tax & Business Services. Over and out.