The rise of OnlyFans, YouTubers, TikTokers, and other content platforms presents lucrative opportunities for content creators to monetize their audience. However, the tax authorities are now paying attention to this thriving industry.
In October 2022, OnlyFans CEO Ami Gan celebrated a significant milestone, announcing that the platform had disbursed $10 billion to content creators since its inception in 2016. While primarily recognized for adult content, OnlyFans aims to diversify its scope by offering subscription and reward models to a broader array of content creators, including chefs, personal trainers, and more. While there are numerous success stories of content creators, like Perth-based Lucy Banks, who disclosed earnings of $60,000 in a single month on Channel 7, the average monthly income hovers around USD $150-$180. Content creators may also receive various forms of “gifts” from their subscribers.
OnlyFans is not the only platform generating revenue for Australians; there are countless other stories of success. Google’s AdSense calculator estimates that finance channels with 50,000 monthly views can expect earnings of $15,012 ($9,390 for beauty and fitness channels). The message is clear: content creators across various niches are reaping rewards, and the Tax Office seeks to ensure that everyone comprehends their tax obligations.
Taxation of Content Creators
A recent update from the Australian Taxation Office (ATO) in April outlines the regulatory expectations for assessing tax on content creators:
Income Tax on Money, Gifts, and Goods
If you earn income as a content creator, it will likely be subject to taxation, unless your content creation is genuinely a hobby with no profit-making expectations (see below). For subscription-based platforms like OnlyFans, the profit-making intent is usually clear.
The ATO emphasizes that assessable income includes not only money but also appearance fees, goods, cryptocurrency, or gifts from fans. Non-monetary income, such as received goods, can be challenging to track and report. For example, if a company sends you an $800 handbag, you must declare its market value as income and pay tax on it. Receiving multiple items or substantial inducements could create tax challenges because you will need cashflow to cover that.
The ATO’s stance that all gifts and products should be reported as assessable income doesn’t account for complexities in practice. The situation may vary, particularly if you create content as a hobby without profit-making intentions.
Tax rules consider income earned “as soon as it is applied or dealt with in any way on your behalf or as you direct.” For OnlyFans content creators, this happens when their OnlyFans account is credited, not when the funds are transferred to a personal or business account. Hiding income in your platform account won’t exempt it from taxation. From 1 July 2023, a new reporting regime will require electronic distribution platforms to report transactions to the ATO, starting with ride-sharing and short-term accommodation platforms and extending to all other platforms, including OnlyFans, from 1 July 2024.
Do I Need to Register for GST?
In general, if you earn or expect to earn $75,000 or more per annum, you need to register for the Goods and Services Tax (GST). However, some exceptions apply, such as Uber and ride-sharing drivers who must have an Australian Business Number (ABN) and be registered for GST, regardless of earnings.
Even if a content creator is required to register for GST, not all income and goods received will trigger a GST liability. Special provisions in GST rules may make supplies to foreign resident customers GST-free. Claiming GST credits for expenses related to these activities is generally possible.
What Deductions Can I Claim?
Profit-making ventures allow content creators to claim deductions for expenses directly related to income generation. Items like video production equipment, microphones, and online stores may be deductible, although deductions might be spread over several income years. However, expenses like cosmetic surgery, gym memberships, everyday clothing, or hairdressing for appearance improvement are typically not deductible as they are considered private expenses. Content creators can refer to the ATO’s occupation-specific guides for a list of eligible deductions.
When Is a Side Hustle Considered a Business?
Distinguishing between a side hustle and a business can be nuanced. Several factors, including transaction regularity, self-promotion, marketing activities, profit-making intent, the scale of activities, and business-like operations, help determine whether an endeavor is a business or a hobby. Hobby income is not assessable, and expenses are not deductible, while business income must be declared, with potential deductions for related expenses, subject to specific analysis.
Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 or info@pittmartingroup.com.au.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
By Robert Liu @ Pitt Martin Tax
Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.