Income of ‘OnlyFans’ and Other Content Creators

Some guidance has been released by the ATO on key tax issues that must be considered by content creators. The message from ATO is that taxpayers who receive benefits for creating content might need to define this as income for tax purposes. According to the ATO, some content creators might get money by selling merchandise or through subscription fees from followers to access the content. They might also receive gifts or tips. All of these come under assessable income and might need to be defined as income for tax purposes. Other issues that content creators are required to consider:

  • Cash flow considerations. A significant tax liability could be generated when receiving goods with a large value. Does the content creator have enough cash to pay the tax?
  • The income received can have an impact on study loans or Medicare levy calculations.
  • From the activity, if the turnover is at least $75,000, the taxpayer will need to register for GST.

Tax position can get complicated, if the content creator receives money/income from foreign parties, especially if it is a matter of GST. Certain supplies can be GST-free when they are made for a foreign resident.

1.7 Million Drawn into Bank-Derived Residential Property Data Matching

The ATO has started a new data-matching program, which is related to residential investment property loans. The program will contain data given by the bank starting from the 2022 income year.

The aim of a program is to minimise the tax gap resulting from incorrect reporting of rental property income and expenditures that make up a significant part of the overall tax gap of individuals. The ATO has spotted the reason for the tax gap in this area has been rental property owners that incorrectly apportion the cost of loan interest where loans have been redrawn or refinanced for personal purposes.

The data matching program will contain details of transactions and loan accounts to residential real estate investments. It will have information about the property involved, loan account holders, interest charged, and repayments.

Practitioners can expect to claim interest deduction to come under increased scrutiny that can be a result of this data matching program. As the tax treatment of interest costs can be a complex area, it is important for practitioners to ask appropriate questions when talking about rental property deductions with customers.

GST on Grants Accessed by Non-Profit Entities

The ATO has released some updated guidance on the GST implications for non-profit organisations that receive sponsorship income and government grants. From a GST perspective, the problem is whether the entity makes a supply in relation to the receipt of the funds.

If the entity only needs to meet eligibility requirements to receive the grant, then a grant is not subject to GST. On the flip side, if the entity has to give something of value in exchange for the payment, then it will increase the chances that GST will be triggered.

When it is a matter of sponsorship arrangements, the entity often provides benefits, such as signage, advertising, naming rights, etc., in return for the payment. If the entity is registered for GST, the arrangements would trigger a GST liability.

The ATO guide also considers situations where ancillary funds give property, money, or benefits to other deductible gift recipients (DGRs). Ancillary funds will enter into funding agreements with DGRs when they give access to the grant. Funding agreements don’t create a binding contract, they expect that the DGR will use the grant for other activities.

Register of Foreign Ownership of Australian Assets

The ATO and government are creating an updated Register of Foreign Ownership of Australian Assets that will replace current foreign investment registers that are now managed by the ATO and expand on the assets, which will be registered. For managing this process, foreign investors and their representatives will use the online services of the ATO from 26 June 2023.

The new register will consolidate current ownership registers concerning residential and agricultural land and water interest and will be expanded to include:

  • Residential land
  • Commercial land
  • Agricultural land
  • Business and entity-related interests
  • Mining, production, and exploration tenements

Administration of the register will be done by the ATO who will give further details after establishing the register.

Conservation Covenant Tax Concessions

Various tax concessions are available for taxpayers who have entered into a conservation covenant over land they own and they meet some conditions. The conservation covenant must restrict certain activities on the land that may degrade the land’s environmental value, be permanent and approved by the Environment Minister.

If the conditions are met, it is possible for a taxpayer to claim a tax deduction for the amount of decrease in the land’s market value, to the extent the decrease is attributable to entering into the covenant. To claim the deduction:

  • The taxpayer must not receive property, money, or any other material benefit.
  • The covenant must be:
    • over land owned by a taxpayer
    • entered after or on 1 July 2002
    • perpetual, which is, it is binding on the taxpayer as the existing landowner and all future owners of the lands
    • entered into with DGR, the commonwealth, a territory, a state, an authority of the Commonwealth, or a local governing body.
  • As a result, decrease in the market value of the land.
  • The decrease in the land’s market value must be over $5,000 or the taxpayer must have obtained the land not more than 12 months before they enter the covenant.

A valuation acquired by the ATO is necessary to claim the deduction. It is also important to consider CGT implications related to entering into a conservation covenant. If you sign a conservation agreement over land you own, CGT event D4 will take place. Under CGT event D4, a capital gain or loss could happen depending on the circumstances. However, if you did not receive any capital proceeds for entering into the covenant, CGT event D4 is disregarded, and you are not entitled to a deduction under Division 31 for doing so. In that situation, CGT event D1 must be taken into account.

PAYG Withholding Prefill Data for Activity Statement

From July 2023, the ATO will use data on salary and wage from STP lodgements during every tax period to prefill PAYG withholding amounts of employers in their activity statements. The availability of the pre-filled data will be for:

  • Label W1: Total wages, salary, and other payments
  • Label W2: Amount withheld from payments demonstrated at W1

Employers will need to review the data and make changes if required.

Cyber Security for Small Businesses

The ATO has released some tips for small businesses who want to improve their systems and prevent increased risk of cyber security threats. The following are some tips:

  • Installing all apps and software updates. If they are using older versions of software, then their systems will be vulnerable to more developed attacks.
  • Turn on automatic updates. It can minimise the risk of skipping important updates.
  • Use multi-factor authentication where possible. Usually, MFA combines 2 or more security measures such as passwords, fingerprints or physical tokens to protect accounts.
  • Use strong and unique passwords that no one can guess. Unique, long and unpredictable phrases are not easy to crack for cybercriminals.
  • Teaching business owners and their staff to prevent, identify and report cyber incidents.

Rulings, Determinations & Guidance

Extension of STP Exemption for WPN Holders

This draft legislative instrument will consider the exemption from STP reporting for employers with a WPN extended until 30 June 2026. Once finalised, the instrument offers that an entity will be exempt from an STP reporting obligation if:

  • The obligation arises in the period starting on 1 July 2023 and ending on 30 June 2026, and
  • When the obligation arises, the entity:
  • doesn’t have an ABN; and
  • has been allocated a WPN by the ATO for PAYG withholding purposes.

On 9 May 2023-24, Parliament will sit again for the federal budget.