Earning income from YouTube, Ticktok, or Onlyfans? Creating content for a blog or live-streaming gaming?
Congratulations, you’re a content creator!
Once your online content starts generating income, it is necessary to declare that income to ATO. If you're obligated to pay taxes, your online content income may be subject to two taxes: income tax and GST. Let’s see how it works!
If your online content is considered a business, it is necessary to claim your online income for income tax purposes.
Generally, a business involves a set of continuous and repeated activities you do for the purpose of making a profit. To find out whether you are in business, refer to ATO- Are you in business?.
Income generated through your online content includes
- money for advertising or appearance fees
- goods and gifts like a new gaming console, clothes, or make-up
from Australia, or overseas. If you are an Australian resident, you must declare the income you earn anywhere in the world in your Australian tax return. If you are a foreign or temporary resident, you declare any Australian-sourced income you earn in your Australian tax return.
In general, your worldwide income will be taxed in your country of residence; however, if you have already paid tax overseas, you may be able to claim a foreign income tax offset. If claiming an offset of $1,000 or less, you only need to record the actual amount of foreign income tax paid that counts towards the offset.
If your online content income (GST turnover) becomes $75,000 or more, you need to register for GST. GST is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia and on most imports of goods.
Exports of goods and services from Australia are generally GST-free. A supply of a service is GST-free if the:
- recipient of the service is outside Australia, and
- use of the service is outside of Australia.
If you earn foreign income through your online content, you can either not include GST in the price of your service or claim for tax credits.
You are located in Australia and registered for GST. You post content on a social media platform. Under the agreement with the platform, subscribers from around the world can purchase and view your content.
The platform provides you with the location of each subscriber and the value of your sales. You can work out your GST-free sales by determining which sales are made to offshore subscribers.
You collect GST on your taxable sales and pay it to the ATO. You also claim GST credits for the GST included in the price of any goods and services for your business expenses.
If you can't obtain the location of each subscriber, all your sales will be taxable.
The supply of service is GST-free if the supply is used or enjoyed outside Australia or the supply is made to a non-resident who is not in Australia when the supply is made.
Suppose you are a GST-registered Australian freelance writer, who is engaged by an English company to write a piece of an article that will be published in England.
You write the article in Australia and send it to the non-resident publisher based in England. Your service has been exported to the non-resident publisher who was not in Australia when the supply was made, so you don’t need to include GST in your invoice to the publisher.
CTK Accounting is a full-scope accounting firm based in Wollongong, servicing clients nationally.
For advice on Tax, BAS, GST, Bookkeeping, and Payroll issues visit us at ctkaccounting.com.au