Social Media Influencer
As the social media sector is a billion-dollar industry. It is estimated that, in 2023, there is a total of 4.89 billion social media users worldwide. An increasing number of taxpayers (particularly young adults) are generating significant amounts of income as influencers, primarily by providing content to their followers through social media platforms such as YouTube, Instagram, Facebook, and TikTok.
With little cost to start up and a very low barrier of entry, there are increasingly more people transitioning from a simple pursuit of a hobby/pastime sharing content on social media into an actual business, by directing their efforts towards making a profit.
But how will you know if an influencer’s activity is just only a hobby or if it constitutes an activity that will classify as a business?
In this regard, the ATO has outlined key indicators to provide assistance in determining whether an activity or series of activities is a business or a hobby. These indicators have been established by case law and can be applied to taxpayers more broadly (including influencers).
According to TR 97/11 and TR 2005/1, the key indicators for determining whether an activity undertaken by a taxpayer constitutes the carrying on of a business are as follows:
(a) The activity has a significant commercial purpose or character.
(b) There is more than just an intention to engage in business.
(c) There is an intention to make a profit and the prospect of making a profit.
(d) The activity is carried out in a similar manner which is characteristic of the industry.
(e) There is repetition and regularity of the activity.
(f) The activity is planned, organized and carried on in a business-like manner directed at making a profit.
(g) The size, scale and permanency of the activity.
(h) The activity is not a hobby, form of recreation or sporting activity.
Ultimately, whether a business is carried on is a question of fact and degree, determined by applying the relevant indicators to the particular circumstances. Importantly, no single indicator is decisive. Rather, the indicators must be considered in combination and as a whole to arrive atthe “large or general impression gained” (refer to Martin v FCT  HCA 100) as to whether the taxpayer is carrying on a business or not.
Such a distinction is important because income derived from carrying on a business is assessable, and any expenditure incurred in carrying on that business is an allowable deduction. In contrast, an influencer’s activity that is merely a hobby results in any income the activity generates not being assessable and, correspondingly, any expenditure in relation to it will not be deductible.
If you need help, don’t hesitate to contact us.
Yan (Jenny) Qi CA
Founder of Progress CA Pty Ltd
Contact no. 0403 050 779