The rise of social media influencers as a financially viable career in recent years has been an exciting development. With the rise of social media, influencers have been able to reach and engage larger audiences, earning money through sponsored posts, affiliate links, and more.
This new career path has created a unique opportunity for influencers to monetize their influence and create a potential source of income. As a result, many influencers have been able to create full-time careers out of their social media presence and have become more visible in the public eye.
However, with this new development comes a price: social media influencers also have to pay their share of taxes. In 2019, the Australian government thanks to the Instagram Tax of Australia.
What is the Instagram Tax?
The Instagram Tax in Australia is a tax initiative created by the Australian government in 2019. It applies to individuals who are earning income from their social media influence. The tax requires influencers to declare any income from sponsored posts, affiliate links, and other forms of promotion on their tax returns.
The government has also introduced a 10% goods and services tax (GST) on any income earned from influencer activities. This tax ensures that influencers pay their fair share of taxes like any other business or individual. Additionally, the government is also cracking down on influencers who are not declaring their income or not paying their taxes. This ensures that everyone is paying their fair share and that no one is taking advantage of the system.
What Does This Mean For Influencers?
If you're a social media influencer in Australia, you now need to keep accurate records of your income and expenses. You must declare any income from sponsored posts, affiliate links, or other promotional activities on your tax return. Additionally, you must pay the 10% GST on any income earned from influencer activities. Failure to do so could make you liable to pay hefty fines and penalties from the Australian Tax Office, so it's crucial to be aware of your obligations and ensure you stay compliant with the new laws.
Tax laws can be confusing, but if you are earning a consistent income from non-cash or cash benefits sources, you will need to declare it in your tax return. If your use of social media is merely a hobby, then you don't need to worry about declaring it.
However, if you consistently receive items or cash in exchange for posts and promotions, register your social media name as a business and have an Australian Business Number (ABN). This is so that you can declare your earnings, which is now an income stream.
To make it crystal clear, if you make more than $75,000 in a year from your business activities, you must register for Goods and Services Tax (GST) and file business activity statements.
Conclusion
Keeping up with tax laws can be challenging, especially if you're new to the business world. A social media influencer's schedule can be hectic, and you may find it challenging to track what you owe to the government. The best thing to do is to hire an online accountant who can help you understand the taxation laws associated with your activities. They can also advise on the best ways to manage your finances and ensure you comply with the law.
The ECommerce Accountant is an online accountant that helps online entrepreneurs minimise tax and increase profit. Contact us today to book a free strategy session.
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