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socialmediacoach.com.au

Published by Dotto, from the ATO’s own pages

Social media coach: the money side of being a creator

Ad revenue, a brand deal, a box of free product on the doorstep: the Australian Taxation Office has written down how it sees each of them. This guide, published by Dotto, puts what the ATO says about a creator’s money into plain words, one question to a page, with the pages it comes from listed at the foot of each.

General information about the ATO’s published guidance, not tax advice, and never a view on one person’s situation. The official place to check is the Australian Taxation Office.

A phone on a small tripod among fallen leaves in a bare winter wood, its screen showing the shot it is framing.
A phone on a tripod, filming in a winter wood. Photo by kbk8196 on Pixabay

Three lanes, one question

The ATO’s guide for content creators starts from one question: is the creating a business? It says the answer matters because it affects your tax obligations. The guide places content creation in one of three lanes: first, a business; second, “an income-producing activity that does not amount to carrying on a business”; and third, a hobby or recreational pursuit.

  1. A business

    Income is assessable, non-cash amounts included.

    Eligible deductions and concessions can be claimed, and records kept.

    Registrations such as an ABN and GST apply as the rules require.

  2. Earning, but not a business

    Income is generally assessable, non-cash amounts included.

    Eligible deductions can be claimed, and records kept.

    ABN and GST registration don’t apply.

  3. A hobby

    Amounts received are generally not assessable income.

    Related expenses are not deductible.

    The ATO lists no other tax implications.

Summarised from Table 1 of the ATO’s guide for content creators.

The middle lane is the one people miss. The ATO says that ‘not carrying on a business’ does not automatically mean amounts received are tax-free, and that they may still need to be declared in a tax return. It says this commonly happens with a side hustle, an activity carried out alongside a main job or business to earn extra income, which may itself be a business or may not, depending on the facts.

A genuine hobby is the main exception. The ATO describes it as something done mainly for enjoyment, recreation or leisure rather than profit, where any money that comes in is incidental to the hobby rather than the reason for it.

Who counts as a creator, in the ATO’s words

“A content creator is an individual that produces and shares digital content online and receives amounts, including non-cash benefits from such activity.”

ATO, Are you in the business of content creation?

Its examples of content are videos, photos, written pieces, podcasts and live streams. Among the activities it says a creator may take on is earning from content through advertising revenue, platform payments, sponsorships, brand collaborations, affiliate marketing, subscriptions or sales of digital products.

The guide calls itself a general summary for individuals and sole traders only; it does not cover the particular circumstances of companies, partnerships or trusts. The pages here follow it, so they are written for a creator working in their own name.

Asking the ATO

For a creator still unsure which lane they are in, the ATO’s guide names its own next steps. It points to a course for creators, Content, clicks, income and tax, on Essentials to strengthen your small business; to a registered tax professional, who can help with how the rules apply to particular circumstances; and to a private ruling, for the ATO’s view on them. business.gov.au adds that a private ruling gives an answer that protects you from penalties and interest.

Five guides

Each guide is marked with the lanes it speaks to.

  1. 1

    Hobby or business: the ATO’s factors

    How the ATO weighs a creator’s activity, from commercial purpose to size and scale, and when a business starts and ends.

    Business Not a business Hobby

  2. 2

    Gifts and free products

    When a product, a trip or a discount counts as income, and how the ATO puts a value on it.

    Business Not a business Hobby

  3. 3

    Platform payments and records

    Ad revenue, tips, overseas payouts, income that keeps arriving after the posting stops, and the records behind them.

    Business

  4. 4

    Registering for GST

    The $75,000 threshold, how a creator’s turnover is counted, and where foreign advertising payments fit.

    Business

  5. 5

    Deductions creators can and cannot claim

    The ATO’s three rules for a business expense, applied to the gear, the makeup and the phone bill.

    Business Not a business Hobby