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The Ultimate Guide to OnlyFans: Earnings and Filing Taxes
With the rise of social media and digital platforms, creators are finding new ways to monetise their content. OnlyFans has gained significant popularity as a platform that allows creators to share exclusive content with their fans for a fee. However, when it comes to earning money through OnlyFans in Australia, it's important to understand the tax obligations and how to navigate the tax system.
We work with a large number of OnlyFans and Social Media Content Creators. Here are some of the items we frequently receive questions on:
Earnings on OnlyFans:
Understanding how your earnings are generated on OnlyFans is essential for managing your finances effectively. On the platform, you earn revenue through subscriber fees, paid messages, tips, pay-per-view (PPV) content, and referral bonuses. Keep track of your income sources and analyse them regularly to optimize your earnings potential.
Keeping Track of Income and Expenses:
- Record-Keeping: Maintaining accurate records of your OnlyFans income and expenses is crucial for tax purposes. Utilise accounting software or a dedicated spreadsheet to track your earnings, subscription fees, equipment costs, marketing expenses, internet bills, and any other relevant expenses.
- Bank Account: Consider opening a separate bank account for your OnlyFans income and expenses. This helps with record-keeping and simplifies the process of calculating your net income.
Operating a Structures:
There are different types of structures you can operate your OnlyFans activities out of. Here are a few examples:
- Sole Trader: The most common structure where you declare your income and expenses in your personal tax return and pay tax at your individual tax rates.
- Company: Companies pay a flat tax rate of 25% for small businesses and provides asset protection. The administration and compliance costs are more expensive for a company compared to a sole trader. There are other considerations as well for a company such as declaring a wage or dividend in order for you to benefit from your business’s profits.
- Trust: This provides asset protection like a company but the income the business produces gets distributed out to beneficiaries. If the only beneficiary is you, then you will pay tax at the same rate as you would have as a sole trader. The administration and compliance costs can be like a company.
The question of which structure to use can be complicated and we recommend engaging with us to discuss which structure is best for you.
Registering for an Australian Business Number (ABN):
- Once you have settled on your structure and have set it up, you will need to register for an ABN. This is essential for tax purposes and allows you to claim deductions related to your OnlyFans activities.
- ABN Application: Please engage us if you require help with registering for an ABN.
Reporting Income and Filing Taxes:
- Income Tax Return: When filing your annual income tax return, include your OnlyFans earnings as part of your assessable income. Declare your income accurately to comply with the tax regulations.
- Deductions: As an OnlyFans creator, you may be eligible to claim deductions for expenses incurred in running your business. This can include equipment, marketing costs, internet bills, photography or video equipment, costumes, props, and more. Keep receipts and records of these expenses to support your deductions.
- Goods and Services Tax (GST): If your OnlyFans earnings exceed the GST registration threshold (currently AUD 75,000 per year), you will need to register for GST.
- BAS Lodgment: If you are registered for GST, you are required to lodge your BAS either monthly, quarterly, or annually, depending on your circumstances. The BAS report includes information about your income, expenses, and GST obligations.
Remember to consult with a qualified accountant or tax professional to receive personalised advice based on your unique circumstances.
If you are an OnlyFans content creator and need assistance with your tax returns please give us a call at 9411 5422 or book an appointment with one of our experienced accountants and they can provide you with the correct advice. This blog has been prepared for the purposes of general information and guidance only. It should not be used for specific advice or used for formulating decisions under any circumstances. If you would like specific advice about your own personal circumstances, please feel free to contact us on 02 9411 5422. We can help make sure the right method is used to give you the maximum possible tax deduction associated with any of these methods.