Maximise Tax Deductions Content Creators

Understanding Tax Deductibility for Content Providers: Maximize Your Income Tax Return

Content creators on various media and social media platforms need to know what expenses you can claim as a tax deduction. There's a lot of  misinformation out there, particularly about items like clothes and makeup, it's important to get the facts straight. Here we will help you understand the tax deductibility of your expenses, from makeup to computer equipment, to maximise your deductions and get a good refund.

Index

1. Computer Equipment and Software
2. Home Office Expenses
3. Stationery and Consumables
4. Professional Services
5. Subscriptions and Memberships
6. Non-Deductible Items
7. Offsetting Losses Against Wages Income
8. Key Takeaways

1. Computer Equipment and Software

If you use a computer, camera, or any other electronic device primarily for creating content, you can claim a tax deduction for the decline in value (depreciation) of these items. This also includes software and apps used for editing videos or photos.

Example: Sandra, a YouTuber, buys a new laptop for $1,500 to edit her videos. She can claim a tax deduction for the depreciation of the laptop.

2. Home Office Expenses

If you work from home, you can claim a portion of your home office expenses. This includes electricity, internet, and phone usage. You can also claim a tax deduction for office furniture like desks and chairs.

Example: Terrry, a blogger, uses a room in his house exclusively as his office. He can claim a portion of his electricity bill and internet costs as a tax deduction.

3. Stationery and Consumables

Items like notebooks, pens, printer ink, and other office supplies used for your content creation are tax deductible.

4. Professional Services

Fees for professional services such as accountants, legal advice, or financial planners related to your business are tax deductible.

5. Subscriptions and Memberships

If you subscribe to professional journals or memberships that are directly related to your content creation, these can be tax deductible.

Example: Sarah, an influencer, subscribes to a professional photography journal to improve her skills. This subscription is deductible.

6. Non-Deductible Items

Clothing and Makeup

Generally, expenses for clothing and makeup are not deductible, even if you wear them in your videos or photos. The ATO considers these personal expenses unless they are costumes or stage makeup that you wouldn't wear outside of your content creation activities.

Example 1: Alice, a beauty vlogger, buys a new dress to wear in her videos. This expense is not deductible because the dress is considered personal clothing.

Example 2: Antony, a fashion influencer, buys everyday makeup to use in his tutorials. This expense is not deductible because the makeup is considered a personal expense.

Personal Expenses

Any expenses that are personal in nature, such as your regular haircuts, gym memberships, or personal meals, are not tax deductible.

Example 3: Thomas, a fitness influencer, buys a gym membership. Even though he creates content at the gym, the membership is considered a personal expense and is not tax deductible.

Example 4: Laura, a travel blogger, buys meals while on a personal trip. These meal expenses are not tax deductible because they are considered personal expenses.

Everyday Clothing

Regular clothing that you wear in your daily life, even if you wear it in your content, is not tax deductible.

Example 5: Chris, a lifestyle vlogger, buys a pair of jeans to wear in his videos. This expense is not tax deductible because the jeans are considered everyday clothing.

Promotional Products

If you purchase clothes or makeup that you are promoting as part of your content, these items are generally not deductible unless they are specifically for business use and not for personal enjoyment.

Example: Lily, a beauty influencer, buys a new line of makeup to review on her channel. While she uses the makeup for her content, the expense is not deductible as it is considered a personal expense. If the makeup was used SOLEY for the review and not for personal use then tax deductibility would apply.  Apportionment rules also apply if sufficient records are available.

7. Offsetting Losses Against Wages Income

If your content creation activities result in a net loss after accounting for all tax deductible expenses, you may be able to offset this loss against your other income, such as wages. However, there are specific rules and limitations under the non-commercial loss provisions that you need to be aware of. Generally, to offset a business loss against other income, your business must pass one of several tests (e.g., the assessable income test, profits test, real property test, or other assets test).

8. What have we learned?

• Depreciation: Claim the decline in value for business-related equipment and furniture.
• Home Office: Deduct a portion of home office expenses if you work from home.
• Consumables: Office supplies and professional services directly related to your business are tax deductible.
• Subscriptions: Only subscriptions and memberships directly related to your content creation are tax deductible.
• Personal vs. Business: Be mindful of the distinction between personal and business expenses. Clothing and makeup are generally not deductible unless they are costumes or stage makeup.

By understanding these guidelines, you can ensure that you are correctly claiming your deductions and avoiding any pitfalls. Always keep detailed records of your expenses and consult with Gotax if you’re unsure about any deductions. This will help you stay compliant with the tax laws and maximise your allowable deductions.

And when you're ready to do your tax, consider the Business Return for Individuals as Gotax.com.au