The ATO is using data matching technology to crack down on influencer gifts

2023 0419 Ato Focusing On Influencer Gifts This Tax Year

Tax time is approaching again at an alarming speed and we’re here to remind you that a focus of the Australian Tax Office (ATO) this year is undeclared luxury gifts #gifted to influencers.

Earlier this year the ATO issued a warning to influencers regarding financial penalties for failure to declare gifts received as income or incentives. These are considered non-cash benefits and can include jewellery, designer clothing, cars, holidays, appliance and more. They might not be cold hard cash, but they are considered taxable income by the ATO.

This move is in addition to the ATO’s focus on taxing the income that influencers receive from on-selling items they receive for free from brands — a practice that is largely looked down upon.

There has also been talk over the last six months about changing the tax laws around how high-profile individuals can profit from their fame.

Celebrities and high-profile influencers in particular will be targeted by these crackdowns, but companies won’t escape the tax hammer. According to the ATO, companies that provide luxury gifts to influencers could also face charges if they fail to report their value at tax time.

It’s certainly a messy area. One could argue that it could be difficult to prove whether a gift is being sent as a form of payment or incentive for posting social media content — particularly if there is no official brand deal or collaboration between the two parties.

There is also the added complication of not all influencers actually being financially secure. It’s not only influencers with mammoth followings and lucrative brand deals that get sent high-value items as gifts. In the age of micro-influencers and focus on engagement, it’s common for people with more modest social media followings to be gifted items.

In these instances the individuals may not have the income to afford to pay taxes or the items they are sent that, while expensive, do nothing to actually pay their bills and put food on the table.

If you were wondering exactly how the ATO can police all of this, its answer is data matching technology — which it has already been using across other platforms for a number of years to track undisclosed income. This includes online sales, overseas bank accounts, specialised payment services, ride-sourcing and cryptocurrency.

Now it will be using this technology to monitor social media platforms for potential discrepancies specific to gifts.

So now is probably a good time to get your house in order if you’re an influencer or a brand that has gifted items that need to be declared this financial season.

If you’re not sure about how to navigate this area of your taxes, get yourself an accountant. No, not one of the TikTok variety.

Article Credited to Tegan Jones, SmartCompany

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The information in this newsletter / factsheet is factual but general in nature. It should not and is not to be construed as advice at any level whatsoever. Because it contains general information that has not been tailored to your personal circumstances it may not be suitable information for you. You must always seek personal financial or taxation advice prior to acting on this information. Further, as many of the comments in this newsletter / factsheet are general in nature, anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

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