By Tina Zawila
As we get into the swing of the 2024 tax season, it’s worth noting that one of the target areas of the ATO this year is undeclared income from the sharing economy.
The activities of influencers and content creators can start out as a hobby, but can quickly grow and earn a substantial income, often without any thought of the potential business and tax consequences.
The ATO defines business activities as “a set of continuous and repeated activities you do for the purpose of making a profit. Profit can be in money, but it can also be made through other means, like being paid with goods and services (such as a barter deal).” This last part of the definition could easily capture the activities of influencers and content creators where they are “paid” via “free” goods or services.
Of course, you must factor in the size and scale of your activities. Occasional activities that are not carried out in a systematic or regular way, generating low value income (or free samples), promoted to your friends and family, may simply be a hobby.
However, interestingly, the ATO website now uses an example of a taxpayer starting a video sharing channel to help you assess if you are in business. The example shows how uploading a few ‘how to’ videos can grow into a channel with a production schedule, regular weekly activities, use of specialist sound and lighting equipment, advertising, and importantly generates income via the video sharing platforms’ Partner Program. Clearly this is an area that is growing in popularity and the ATO has determined it is worth covering on their website.
Therefore, if your hobby has grown into a business venture it’s important to seek professional advice to ensure the business is appropriately structured and that you are not left with an expected tax bill.
Some successful content creators operate their business like a production company and take advantage of potential tax rebates and deductions, mitigate risks, ensure their assets are appropriately protected, and that they are not losing 47% of their income to tax.
If your hobby has grown into a business venture, call the professional team at UHY Haines Norton on 49721300.
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