Income Tax Return For Online YouTube Content
YouTube has become a popular method for generating extra income, and the Australian Tax Office has taken notice.
Even if you started your YouTube channel as a hobby, when you start to receive income from your streaming content, it is likely to be classified as a business by the ATO. Therefore, you need to pay taxes on any income you have generated from your channel.
If you’re not sure how to organise your YouTube 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 YouTubers Pay Taxes?
Quite simply – yes. Your YouTube channel is just like any other form of income-producing activity. When it starts making money and you start investing in equipment such as cameras, microphones, props, lighting and so on, it is for all intents and purposes a commercial endeavour.
Not sure if your channel would be classified as a hobby or a business? Ask yourself these questions –
- Do I make a profit from my channel, or intend to in the future?
- Do I repeat activities regularly to grow my channel and following?
- Do I engage in planned or organised administrative activity for my channel such as keeping accounting records?
- Do I purchase items for my channel that I intend to claim as a tax deduction?
If you answer yes to any of these, the ATO would likely classify your channel as a business.
If you’re still not sure whether your channel would be classified as a business or a hobby, speak with one of our professional tax agents who can advise you.
Forms of Income from YouTube
While many are lured to YouTube by the dream of easy internet riches, producing a YouTube channel is hard work, and it can take years to build up an audience big enough to support a lavish lifestyle.
That being said, there are many YouTubers who make a comfortable living from their channels. Here are the main ways they do it.
The majority of a YouTuber’s income is made through advertisers. When viewers click on ads in videos, or view over 30 seconds of an in-video advertisement, the channel owner receives a small payment of around $.18 (paid per 1,000 views).
The more viewers that watch your videos, and the more clicks your channel racks up, the more income you will make. However, Google keeps 45% of this revenue, so on average a YouTuber makes less than $10 per 1,000 views.
Affiliate marketing is basically an arrangement where an online seller pays commission to YouTubers for sales generated from their referral links.
Most affiliates make money by posting product review videos to their channel with a link to buy the product in the video description. The amount paid to the YouTuber depends on the arrangement they have with the affiliate manager, but it can be as high as 90% of the product price in some instances.
How Do Taxes Work for YouTubers?
If you’re a YouTuber who is making money from your channel, your income is subject to the same taxes as any other business.
YouTube is required by law to collect your tax information, and may withhold up to 24% of your earnings if they don’t receive it. As a creator outside of the US, YouTube will require you to fill out form W-8BEN to complete your tax information. You can find this form in the Payments tab of your Adsense account.
Do I need to register for GST?
You do not need to register for GST as a sole trader, but that means you cannot claim related expenses on your income tax, nor can you claim GST credits on any business-related purchases.
If you intend to claim GST credits for purchases related to your channel, or if you earn over $75,000 per year from YouTube, then you must obtain an ABN.
Preparing Your YouTube Tax Return
It is your responsibility to file your YouTube taxes correctly each year. YouTube will not do this for you. So it’s important to keep detailed records of your earnings and expenses, including any affiliate revenue.
What expenses can I deduct?
Any items that are directly related to producing your YouTube channel may be deductible at tax time. These include –
- Computer equipment
- Digital camera and related filming equipment
- Lighting equipment and video props
- Internet bills
- Home office furniture
- Contractor expenses (such as outsourced designers)
- Self-education (such as photo editing or video producing courses)
A portion of your house heating and cooling may also be deductible as a work from home expense.
It’s important to make sure that you ONLY deduct the business-related amount of your purchases. For example, if you buy a new computer primarily for your business, but also use it for personal web browsing, social media etc, you cannot claim the whole expense as a business deduction.
How To File Your YouTube Tax Return
If you choose to file your tax return yourself, it can be filed with the ATO through your myGov account. However, we advise using a tax agent to ensure you meet all of your obligations to the ATO and avoid any costly mistakes.
Simply get in touch using the link below to see how we can help take the stress out of tax time.