The rise of social media and online platforms, such as OnlyFans, YouTube, Instagram, Patreon, or Twitch, has opened up wonderful new ways for creators to earn or supplement their income. Still, it’s essential to understand your obligations as a taxpayer.
According to the ATO, the income you receive from your online content is defined as:
- cash
- money for advertising or appearance fees
- goods like a new camera, clothes, or make-up
- from Australia or overseas.
The ATO goes on to say ‘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 considered income and should be declared.’
OnlyFans Content Creators in the Spotlight
Earlier this year, an online OnlyFans creator was slugged with a surprising $15,000 tax bill which she felt unprepared for. It wasn’t that the OnlyFans creator Kaila couldn’t pay the bill; instead, it was very unexpected and a considerable amount to pay in one hit when one didn’t know it was coming. Thankfully, there is something she can do to better manage her tax on her online income. The case just highlights the fact that the ATO has placed OnlyFans creators earning an income within its sights, and the best thing you can do as an only fans creator is to stay ahead of the curve by getting yourself set up properly.
Recording your OnlyFans income and expenses
It is imperative to keep track of your earnings and the value of any gifts received from your online content as this needs to be declared alongside your other income tax, even if it’s just a hobby or a side hustle. Changes coming to how income is reported will be changing as the ATO starts to require online content platforms to report income being earned within Australia. As a simple baseline, you can keep track of any income and gifts received from your online content in a spreadsheet. Also keep track of expenses you incur to create your content as these can be used to offset your income and reduce your tax burden. Some of the deductions can include:
- Filming equipment
- Some Clothing, costumes and props required
- Venue hire (including Airbnb rentals etc.)
- Your photographer or videographer, if you use one
- Some hair and makeup costs.
Cash flow for gifts received in payment of your OnlyFans content
It is not unheard of for content creators to receive products in return for their content. Unfortunately, the ATO considers this as part of your income and will tax you on those items. It’s important to ensure that you receive a balance of gifts and cash as you’ll need to ensure you have the funds to pay your tax bill when it arrives.
Setting up as a business
Whether you are doing this as a full-time job, hobby, side hustle or to make a profit, the general guideline is if you are marketing your content and it has the potential to deliver a profit (some income), then it’s best to consider it as a business. In this case, you’ll need to register for an ABN. Depending on your circumstances, you can set up as a sole trader, a company, just ask Figure it Out
It’s also important to note that if you expect to earn more than $75,000.00 (not including deductions) in a year, you’ll need to register for GST.
Paying tax as you go
Being slugged with a large tax bill at the end of the financial year can be somewhat a shock. Thankfully, you don’t have to have that. Pay as You Go Instalments allow you to pay tax quarterly throughout the year and have less of a surprise at the end of the year when you lodge your tax return.
We’ll FIGURE IT OUT for you
While having to manage your newfound income stream so you don’t get slugged by the ATO can seem scary, help is at hand. From learning how to keep track of your income and deductions, to setting up your business and Pay as You Go Instalments, Figure it Out Accountants are here to figure it all out for you.
Our all female team is here to make your life and tax easier. We get you and your business and know how to set up your tax returns for maximum outcomes with complete discretion. Book an initial date with us to chat about how we can help.
