Tax Return Services for Twitch TV Streamer Income & Donations
Every day, over 4 million broadcasters produce live streaming content on Twitch. If you’re one of them, any income you earn is subject to taxation here in Australia. Even if you feel you’re just having some fun, the ATO may classify your channel as a business, and they’ll expect their slice of the pie come tax time.
If you’re making money from Twitch, YouTube, or any other streaming service for creators, it’s a good idea to speak with a tax agent to ensure you’re meeting your obligations with the ATO.
Do Twitch Streamers Pay Taxes?
Yes they certainly do, just like YouTubers or any other online content creators.
Don’t be fooled into thinking that because you’re not sitting in an office, you’re not running a business. As a general rule, income and expenditure relating to activities that go beyond a hobby need to be declared in your tax return.
If you’re not sure if your Twitch channel would be classified as a hobby, ask yourself these questions:
- Have you developed a logo or branding for your channel?
- Is your ultimate goal to stream full time?
- Do you stream regularly and remind your followers when you’ll be on?
- Do you promote on social media to increase viewers?
Have you invested money into a green screen, lighting, or other equipment?
Do you have sponsorship deals or partnerships?
If you’ve answered yes to any of these questions, you’re probably running a business in the eyes of the ATO. However, if you’re only making small amounts of money now and then, you might be able to still classify your streaming as a hobby.
To clarify the right category for your situation, it’s best to speak with a professional tax agent who can advise you.
Forms of Income on Twitch
Making an income through Twitch can be done in a few different ways.
Viewers donate money to streamers they like and want to support. This is done through a ‘donate’ button on your channel.
Bits are virtual tokens that give viewers the ability to encourage and show support for streamers. They come in different shapes and colours, and animate in different ways. Viewers that use bits to cheer a streamer earn chat badges that get them more recognition. Bits are bought in different sized bundles, and can be used in various ways across the platform.
Viewers can subscribe to channels they love, with subscriptions unlocking extra perks such as exclusive chat rooms and merchandise discounts. Twitch affiliates get a cut of subscription fees, which start at $4.99 and go up to $24.99 a month.
Get enough viewers and subscribers to your Twitch channel, and chances are companies will start to approach you for a partnership deal. In the age of social media, brands are looking at different ways to get their products and services in front of their target audience than old methods such as TV advertising (who even watches free-to-air any more?).
Merchandise and game sales
You can create your own T-shirts, mugs, and merch for your channel and sell it through Twitch. For gamers, viewers can purchase the game they’re watching you play directly from your channel. This gives you a 5% commission on the sale.
Are Twitch Donations Taxed?
Even though you can receive donations through Twitch, you are not running a registered Charity and legally cannot accept charity donations. Your donations are actually payment for a service or goods, which is income. Income is taxable.
Most Twitch channels are accessible by the ATO because they exist as a profit-making enterprise, they receive regular payments, and the channel owner conducts business-related operations to run the channel.
How to File Twitch Taxes?
You need to report on your Twitch net income or loss just as you would with any other business or employment. Being an affiliate for Twitch is like being a contractor for a business. They don’t pay tax on your behalf, nor do they keep records for you beyond your payout figures. It’s up to you to keep records, declare your income, and pay your taxes.
What expenses can I deduct from my Twitch Income?
Anything you purchase specifically for the running of your Twitch channel may be deducted as a business expense. This could include things like –
- Computer hardware and peripherals
- Recording and lighting equipment
- Software subscriptions
- Office furniture and equipment
- Outsourced labour such as video editing or graphic design
You may also be able to claim a portion of your internet, heating, and cooling costs as a home office expense – but only the portion you use for business. You cannot claim your entire bill as a business expense.
What if I have a day job?
If Twitch is your ‘side hustle’ and you work a full-time job, you’ll still have to pay tax on that too. When you lodge your tax return, both streams of income get joined together and taxed at your marginal income tax rate.
Do I need an ABN for Twitch?
If you’re intending to run your channel as a business, it’s a good idea to get an ABN. If you want to register your business, you must get one.
However, you’re not required to get an ABN if you earn less than $75,000 a year from your business. But without an ABN, you cannot claim GST back from the business-related purchases you make.
Let Us Help You Prepare Your Twitch Tax Return
It’s important that you stay compliant at tax time to avoid penalties from the ATO. At National Accounts, our tax agents are experts in tax planning for streaming business owners, and understand how to maximise tax benefits as you grow your channel.
Simply get in touch using the link below to see how we can help take the stress out of tax time.