The evolution of creating entertaining content for consumers to enjoy is a tremendous industry. The stats support this as it shows that 30% of 18 - 24 year olds and 40% of 25 - 34 year olds refer to themselves as content creators. An estimated 50 million people are content creators.
The rise of the gig economy has created these new opportunities for individuals to work as content creators, streamers, and influencers. While these roles offer flexibility and the potential for significant income, they also come with unique tax obligations that can be challenging to navigate.
The ATO is getting more and more alerted to the income earning activities of streamers & influencers and are ramping up their data matching capabilities. From the 1st July 2023, the ATO will have direct access to data transmitted by Twitch, OnlyFans and Patreon. It is always a good idea to come clean on the income you have earnt, as the ATO will be eagerly trawling through their records to find any discrepancies this tax time. As a content creator, it's important to understand your tax obligations and work with an accounting practice that can help you stay compliant and get the best result for you.
What exactly is a content creator?
Content creators do, well just that; they create and promote any content that is likely to be viewed by consumers for entertainment or educational purposes. One doesn't need to go far to find the work of a content creator. If you've been on any social media site then chances are you have seen the work of these individuals’ numerous times. Popular content creators share their content to the following mediums:
Instagram: Instagrammers create visual content, including photos, videos, and stories, on various topics such as fashion, beauty, travel, fitness, and lifestyle.
YouTubers: YouTubers create video content on a wide range of topics, including vlogs, gaming, tutorials, music, comedy, and educational content.
TikTok: TikTokers create short-form videos on various topics, including dancing, comedy, lip-syncing, cooking, and DIY projects.
Twitch: Twitch Streamers create live video content on gaming, music, talk shows, and other topics, often interacting with their audience in real-time (E-Sports is a real thing and is enjoyed by an audience of approx. 540 million people).
OnlyFans: OnlyFans creators share exclusive content with their subscribers, often of an adult or erotic nature.
Patreon: Patreon creators offer exclusive content, early access to content, behind-the-scenes footage, and other perks to their subscribers.
Don't Forget Your Tax Obligations
If you earn income as a content creator in Australia, you are generally considered to be running a business. This means that you are responsible for paying income tax and the Medicare levy. In addition, you may be required to make quarterly pay-as-you-go (PAYG) instalments throughout the year to avoid penalties. It is very common for content creators to begin creating content as a hobby. Genuine hobby interests are not taxable under Australian Tax Law, but there are certain criteria that needs to be met in order for your activities to constitute a hobby.
One of the most common mistakes that content creators make is failing to keep accurate records of their income and expenses. This can make it difficult to calculate your tax liability and may result in underpayment or overpayment of taxes (one is a red flag, the other is a complete and utter waste!). It's important to keep detailed records of your income and expenses, including receipts/invoices, to ensure that you are able to accurately report your income and claim all relevant deductions.
Another challenge that content creator’s face is determining which income and expenses are assessable and deductible. Below is a quick snapshot of what income needs to be declared, and what deductions might be claimed:
Income:
Ad revenue: Many content creators earn income through ads that run on their mediums, such as YouTube, Twitch, or Instagram. This income is typically based on the number of views, clicks, or impressions that the ad receives.
Sponsorships: Content creators may also earn income through sponsorships, where they work with brands to promote their products or services. This income can come in the form of payment, free products, or both (Sorry influencers, that includes free Activewear).
Donations: Some viewers or fans may choose to donate money to content creators as a way to support their work. Although a donation, this is still classified as income and must be reported – although you are great at what you do, you are not a tax-exempt charity...
Affiliate marketing: Content creators may earn income through affiliate marketing, where they promote products or services and receive a commission on any resulting sales.
Merchandise: Many content creators sell their own merchandise, such as t-shirts, hats, or other branded items.
Deductions:
Equipment and software expenses: This can include the cost of purchasing or leasing equipment such as cameras, microphones, computers, and software used in the course of your work.
Internet and phone expenses: A portion of internet and phone expenses may be deductible if they are used for work purposes (Yes! You can claim that very expensive, and very reliable internet speed)
Home office expenses: If a workspace in the home is used for work purposes, a portion of expenses such as rent, mortgage interest, rates, and utility bills may be deductible.
Professional fees: Fees paid to accountants, and other professionals for work-related advice and services may be deductible.
Marketing and advertising expenses: Expenses incurred in promoting their brand or services, such as website hosting fees, graphic design fees, and social media advertising costs may be deductible.
While the above lists can seem straightforward and simple, it's important to work with an accounting practice to ensure that you are declaring all forms of income and claiming all eligible deductions. This will ensure that you avoid any potential red flags that could trigger an audit.
Seek The Right Advice
Working with an accounting practice can provide significant benefits for content creators in Australia. Not only can an accounting practice help you stay compliant with tax laws and regulations, but they can also help you minimize your tax liability and maximize your deductions.
At Maurer Taxation, we understand this industry and can provide the competent advice and services you need in order to breathe easy and keep doing what you do best – entertaining! We specialize in working with content creators, streamers, and influencers in Australia to help them minimize their tax liability, and achieve their financial goals.
Conclusion
As a content creator in Australia, it's important to understand your tax obligations and work with an accounting practice that can help you navigate the complexities of the gig economy, especially because the industry is only set to get bigger. By keeping accurate records, claiming eligible deductions, and working with a qualified accounting practice, you are setting yourself up right to build your business and increase your digital reach to more people seeking your content. If you're a content creator in Australia in need of accounting services, contact Maurer Taxation today to learn how we can help you succeed.
P: 0438 960 990
