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When you need to pay the ATO

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When you need to pay the ATO

If you earn an income from being a social media influencer, there is a fine line between what is considered taxable and what isn’t. Here’s a rundown of when, and how much, you need to pay the Australian Taxation Office (ATO).

A social media influencer typically generates a large following of enthusiastic, engaged people who follow their posts across channels. Brands love social media influencers because they can create trends and encourage their followers to buy the products they promote.

Therefore, there are typically two income streams for influencers: sponsorship from brands who pay the influencer to promote their products, or payments for clicks, whereby the individual is rewarded each time a click is generated onto their channel.

Composite image of social media influencers who pay tax Kayla Itsines (l) and Tammy Hembrow (r).

For tax purposes, the inflluencing of Kayla Itsines (l) and Tammy Hembrow is more than a hobby. (Instagram)

Not all social media influencers have enjoyed the success of the likes of Tammy Hembrow – who has amassed a fortune of $38 million – or fitness influencer Kayla Itsines.

Many people argue that their social media posting is merely a hobby. As such, any income they make from their posts is not taxable. But, whether the revenue earned by a social media influencer from their social media endeavours is income received from carrying on a business or income from a hobby is a question of fact and degree.

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This distinction is important because income received from pursuing a business is considered taxable income.

Hobby or a business? Here’s how the ATO decides

It’s important to stay on top of your activities so you can identify whether your hobby has turned into a business, and when that crossover occurred.

Also by Mark Chapman:

The ATO uses a number of factors to help determine whether a social media influencer’s work is a hobby or a taxable business, including whether:

  • The activity has a significant commercial purpose or character

  • The taxpayer has more than just an intention to engage in business

  • The taxpayer has a purpose of profit as well as a prospect of profit from the activity

  • There is regularity and repetition of the activity

  • The activity is of the same kind, and carried on in a similar manner, to that of ordinary trade in that line of business

  • The activity is planned, organised, and carried on in a businesslike manner — this may be indicated by the size, scale, and permanency of the activity

  • The activity is better described as a hobby, a form of recreation, or sporting activity.

No one indicator is decisive in determining whether a business exists. Instead, they need to be considered in combination and as a whole.

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When a social media influencer can be considered an artist

Based on the nature of their work, a social media influencer could be considered to be carrying on a business as a professional artist. This is a person who carries on the activities of a “professional arts business” as either:

  • An author of a literary, dramatic, musical, or artistic work

  • A performing artist

  • A production associate

The nature of arts activity means that arts businesses typically have different characteristics to those found in other businesses.

For example, people who engage in professional arts businesses are often motivated by creative purposes and the desire to influence public opinion. Art is not always produced with a pre-existing market in mind. Rather, an innovative artist may have to create a new market for their work.

For this reason, a large part of being in business as a professional artist may involve activities directed towards reputation-building and audience/market creation, which could be relevant when considering many online social media revenue streams.

The usual indicators described above still apply to these artistic businesses. But, with the high risk associated with arts businesses, profit may not be an appropriate factor and other indicators may need to be considered, such as:

When social media influencers need to pay tax

A typical point at which the ATO will draw the line between a business or hobby is when the social influencer is able to monetise their work.

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At the outset, they might be able to argue that they were simply posting as a hobby but, when they begin to monetise their content (either through sponsorship payments from brands or direct payments from viewers), this argument is no longer sustainable.

The ATO would argue it is at this point that they should be treated as running a business, meaning that all their income from being an influencer becomes taxable because they had the business indicators of repetition, size, scale, and (possibly) business records.

At this point, our influencer would be required to include the money from their social media activities as assessable income in their tax return.

Once you are carrying on a business, deductions will be allowable for all expenses of a revenue nature incurred in the course of deriving that income, e.g. marketing, advertising, sponsorship, etc.

Also deductible (although typically over several years) are the costs of capital equipment necessary to run the business, including cameras, microphones, mobile phones, laptops, and desktop computers.

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Snapchat Explores New Messaging Retention Feature: A Game-Changer or Risky Move?

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Snapchat Explores New Messaging Retention Feature: A Game-Changer or Risky Move?

In a recent announcement, Snapchat revealed a groundbreaking update that challenges its traditional design ethos. The platform is experimenting with an option that allows users to defy the 24-hour auto-delete rule, a feature synonymous with Snapchat’s ephemeral messaging model.

The proposed change aims to introduce a “Never delete” option in messaging retention settings, aligning Snapchat more closely with conventional messaging apps. While this move may blur Snapchat’s distinctive selling point, Snap appears convinced of its necessity.

According to Snap, the decision stems from user feedback and a commitment to innovation based on user needs. The company aims to provide greater flexibility and control over conversations, catering to the preferences of its community.

Currently undergoing trials in select markets, the new feature empowers users to adjust retention settings on a conversation-by-conversation basis. Flexibility remains paramount, with participants able to modify settings within chats and receive in-chat notifications to ensure transparency.

Snapchat underscores that the default auto-delete feature will persist, reinforcing its design philosophy centered on ephemerality. However, with the app gaining traction as a primary messaging platform, the option offers users a means to preserve longer chat histories.

The update marks a pivotal moment for Snapchat, renowned for its disappearing message premise, especially popular among younger demographics. Retaining this focus has been pivotal to Snapchat’s identity, but the shift suggests a broader strategy aimed at diversifying its user base.

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This strategy may appeal particularly to older demographics, potentially extending Snapchat’s relevance as users age. By emulating features of conventional messaging platforms, Snapchat seeks to enhance its appeal and broaden its reach.

Yet, the introduction of message retention poses questions about Snapchat’s uniqueness. While addressing user demands, the risk of diluting Snapchat’s distinctiveness looms large.

As Snapchat ventures into uncharted territory, the outcome of this experiment remains uncertain. Will message retention propel Snapchat to new heights, or will it compromise the platform’s uniqueness?

Only time will tell.

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Catering to specific audience boosts your business, says accountant turned coach

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Catering to specific audience boosts your business, says accountant turned coach

While it is tempting to try to appeal to a broad audience, the founder of alcohol-free coaching service Just the Tonic, Sandra Parker, believes the best thing you can do for your business is focus on your niche. Here’s how she did just that.

When running a business, reaching out to as many clients as possible can be tempting. But it also risks making your marketing “too generic,” warns Sandra Parker, the founder of Just The Tonic Coaching.

“From the very start of my business, I knew exactly who I could help and who I couldn’t,” Parker told My Biggest Lessons.

Parker struggled with alcohol dependence as a young professional. Today, her business targets high-achieving individuals who face challenges similar to those she had early in her career.

“I understand their frustrations, I understand their fears, and I understand their coping mechanisms and the stories they’re telling themselves,” Parker said. “Because of that, I’m able to market very effectively, to speak in a language that they understand, and am able to reach them.” 

“I believe that it’s really important that you know exactly who your customer or your client is, and you target them, and you resist the temptation to make your marketing too generic to try and reach everyone,” she explained.

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“If you speak specifically to your target clients, you will reach them, and I believe that’s the way that you’re going to be more successful.

Watch the video for more of Sandra Parker’s biggest lessons.

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Instagram Tests Live-Stream Games to Enhance Engagement

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Instagram Tests Live-Stream Games to Enhance Engagement

Instagram’s testing out some new options to help spice up your live-streams in the app, with some live broadcasters now able to select a game that they can play with viewers in-stream.

As you can see in these example screens, posted by Ahmed Ghanem, some creators now have the option to play either “This or That”, a question and answer prompt that you can share with your viewers, or “Trivia”, to generate more engagement within your IG live-streams.

That could be a simple way to spark more conversation and interaction, which could then lead into further engagement opportunities from your live audience.

Meta’s been exploring more ways to make live-streaming a bigger consideration for IG creators, with a view to live-streams potentially catching on with more users.

That includes the gradual expansion of its “Stars” live-stream donation program, giving more creators in more regions a means to accept donations from live-stream viewers, while back in December, Instagram also added some new options to make it easier to go live using third-party tools via desktop PCs.

Live streaming has been a major shift in China, where shopping live-streams, in particular, have led to massive opportunities for streaming platforms. They haven’t caught on in the same way in Western regions, but as TikTok and YouTube look to push live-stream adoption, there is still a chance that they will become a much bigger element in future.

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Which is why IG is also trying to stay in touch, and add more ways for its creators to engage via streams. Live-stream games is another element within this, which could make this a better community-building, and potentially sales-driving option.

We’ve asked Instagram for more information on this test, and we’ll update this post if/when we hear back.

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