ATO Sets its Sights on Content Creators

What’s the difference between a hobby, a side hustle, and a business? New regulations from the Australian Taxation Office (ATO) make it clear content creators will be assessed for tax purposes whenever they derive an income from their activities—even if that income is not delivered in the form of hard currency.

A new update released in April makes it clear content creators are expected to declare their income, which the ATO says can come in the form of “cash, money for advertising or appearance fees, and goods like a new gaming console, clothes, or make-up”.

While the ATO references “make-up tutorials” and “writing for a blog”, they have undoubtedly been spurred into action by the explosion in popularity of subscription–based platforms like OnlyFans, Patreon and Fansly—all of which are well known for hosting adult content.

All Eyes on OnlyFans

OnlyFans CEO Amrapali Gan announced last October that the company had paid out $10 billion to content creators since the platform’s launch in 2016, with the site’s top earners raking in thousands of dollars each month. And while many creators earn considerably less, it’s clear the ATO has no intention of turning a blind eye to any profit-making endeavours.

What is less clear is how the ATO plans to tax income earned in the form of goods received, cryptocurrency, or gifts from fans. Social media influencers who receive payment in the form of goods such as handbags, jewellery, or even holidays throughout the year may find themselves needing to pay tax on items that were gifted to them for free.

Equally unclear is what happens to creators who make content for a hobby and not as part of a profit-making enterprise. While the ATO has stated that all “gifts” should be reported as assessable income, the suggestion fails to acknowledge that many hobby content creators don’t earn a cent from their efforts.

With new rules around transaction reporting coming into effect on July 1, 2023 for ride-sharing platforms and short-term accommodation providers like Airbnb, the ATO says those rules will be extended to content platforms like OnlyFans in the following financial year. 

When do Creators Need to Worry About GST?

With more Australians than ever creating content on global platforms like YouTube, TikTok, and Patreon, the ATO says it has been inundated with questions about when to apply the Goods and Services Tax (GST).

The short answer is that content creators only need to worry about GST once they earn above the $75,000 threshold. Those earning less than $75,000 do not need to register for GST—although they can voluntarily do so if they choose—while there are also certain tax provisions around supplies made to foreign resident customers being done so GST-free. 

Where GST-free income is derived from foreign resident customers, it’s still possible to claim GST credits for expenses incurred in connection with the content created.

What Deductions Can Content Creators Claim?

Those creating content on platforms like OnlyFans and Fansly as a profit-making enterprise can claim certain deductions directly related to that income. This includes items such as cameras, microphones, lighting and other video production equipment, internet services fees, plus other expenses specifically related to the creation of content.

What can’t be claimed are things like cosmetic surgery, the cost of everyday items like clothes and make-up purchased for personal use, and gym memberships. Many of these are considered “private expenses” and can only be claimed proportionally—if at all—and must be corroborated by a detailed expense log.

When is Your Side Hustle More Than Just a Hobby?

While many content creators view their endeavours as little more than a side hustle, it’s important to declare any income earned on platforms like OnlyFans at tax time. Any income above the $18,200 tax threshold is subject to income tax each year—and OnlyFans itself does not withhold any applicable taxes from income generated.

That means some content creators can be hit with an unexpected tax bill at the end of the financial year. While some creators may simply choose to put aside a portion of their earnings for tax purposes, there’s also an option to register for Pay As You Go quarterly instalments. 

Although the ATO has taken steps in recent years to clarify tax obligations for content creators, there are no universal guidelines for when a hobby turns into a tax-generating side hustle. A simple rule of thumb to remember is that if your content generates an income, it will almost certainly be assessed for tax purposes.

Need some extra guidance around tax obligations for content creators? Drop me a line at [email protected] to schedule a chat.