If you start making money from your online content, you will have income to declare. You will also need to consider whether you are in business. If you are, or you want to start your own business, it's important you know what income you need to report, the deductions you can claim and what registrations you may need.
What kinds of income do you need to report?
The income you receive could be:
- cash;
- money for advertising or appearance fees; and
- goods like a new gaming console, clothes or make-up.
It doesn't matter whether the income comes from Australia or overseas. It is all taxable in Australia, as long as you are considered to be a tax resident of Australia.
Some of your supporters may purchase your merchandise or pay a subscription fee to access your content. They may send tips or gratuities (often called gifts). All of these are likely to be income and should be declared.
There are some important things to think about if you're a content creator.
Can you afford to accept the gifts? A new handbag or a free holiday may be enticing, but because it's regarded as income, you'll need to pay tax on it.
Consider how the income you earn will affect your other amounts payable. Sole trader income counts towards your total assessable income, so it could impact your study loans or Medicare calculation.
Make sure you keep your cash flow in mind when it comes to accepting goods or services.
GST
If you're in business, and you have a GST turnover of $75,000 or more, you'll need to register for GST. You will be liable to pay GST on your taxable supplies, even if you don't pass it on to your supporters. However, even if a content creator is required to register for GST, this doesn’t necessarily mean that all of the money and goods they receive will trigger a GST liability. For example, the GST rules contain some special provisions which sometimes enable supplies made to foreign resident customers to be GST-free (although they still normally need to be taken into account in determining whether the supplier needs to register for GST). Even if GST-free income is received from foreign resident customers, it will normally still be possible to claim back GST credits for the expenses incurred in connection with these activities.
Deductions
You will be able to claim deductions for business related expenses. For example, you may be entitled to:
- an immediate deduction for certain prepaid business expenses; and
- an immediate deduction for certain start-up expenses, such as payments for advice or services relating to the business' structure or operation and government fees or charges relating to the establishment of the business.
You may also be eligible for various small business concessions.
If you work from home and have a dedicated room for work (a home office), you may be able to claim a proportion of your mortgage interest or rent, power bills and cleaning costs.
If you don't have a home office, the ATO may let you claim a deduction for additional "running expenses" (eg electricity, phone and internet expenses) incurred as a result of working from home.
Want to find out more?
Talk to us about your tax situation, including GST obligations. We can also help with record-keeping, business activity statements and other important matters.
Please note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Should you have any further questions, please email us at RGA Business and Tax Accountants at reception@rgaaccounting.com.au . All rights reserved. Brought to you by RGA Business and Tax Accountants. Liability Limited by a scheme approved under Professional Standards Legislation
