OnlyFans Creators: declaring extra income, tax claims and audits: practical tips from Australian CEO Michael Jeffriess
With low risk, low capital, and high scalability, OnlyFans is becoming a viable income stream for many Creators. However, understanding taxation through this process is vital. While the average income on OnlyFans is only $180 per month (not bad for a photo of your toes?), the income potential is uncapped, with many earning up to $10,000 monthly. Yet, with a great income comes great responsibilities – namely, tax.
OnlyFans allows Creators to monetise unique content. Known for adult entertainment, the platform can showcase anything from grandma’s cooking to music lessons. Regardless of the content, income earned on OnlyFans is taxable in Australia and should be declared on your tax return.
“While it’s likely the Australian Tax Office (ATO) would consider this as taxable income, the Creator may want to determine if it’s a hobby or a business via ATO guidelines, and there is no clear rule. The safest thing for a OF Creator to do is to get a private ruling to determine how the law applies to their situation, especially since the platform is relatively new, and the ATO doesn’t yet have detailed guidance,” reveals Michael Jeffriess (pictured), Group CEO at LightYear Docs, We Love Group, and Naked Accounting.
“If content creation is a secondary job, and the Creator is a sole trader, their entire income (job, plus content creation) is pooled together as taxable income. For example, for someone who earns $100k in their day job, and $20,000 on OnlyFans, their taxable income will be $120,000. They should note that this may push their income into a higher tax bracket,” adds Michael.
Sole traders can declare their income on an individual tax return. Income includes cash, tips, collaborations, payments, licensed content, and product trades (for example, Creators are given products by brands to promote).
The good news is that Creators can claim deductions for expenses directly related to content creation, such as camera equipment, microphone, lighting, utensils, tech, travel, and editing software. They can also claim gifts given to guests on their streaming or subscription services. Distinguishing between personal and business expenses is crucial to avoid issues with the ATO.
“Maintaining organised and accurate records is key for seamless tax filing. Makeup, hair, and costumes must be deemed stage items, as ordinary beauty products will be too general to claim. Hygiene products and adult toys for producing income can be considered a ‘prop’,” said Jeffriess.
“If the OF Creator only works from home, they are considered a home-based business and might have a home office/studio/content room. Discretion is used to apply a percentage of their home/rent that could be deductible based on the floor space.
“The ATO is getting more advanced with AI and data matching. This means that those who don’t declare income and pay tax will get caught out eventually. The plus side of declaring income is that it’s easier to apply for finance.
“If Creators earn more than $75,000 a year they will need to register for GST. However, as Only Fans is an overseas company, Creators may not be required to remit GST on sales to the ATO on their BAS. The ATO is likely aware that there is the ability for an OF Creator to run reports on their subscribers’ geographical locations, meaning that they may potentially need to remit GST for Australian subscribers with the income having been derived in Australia. However, there is no simple way of accessing this information and it needs to be manually requested via the OnlyFans platform. This may mean that Creators are losing 10% of their sales/revenue and having to remit this to the ATO with no ability to add 10% GST to Australian subscribers,” said Jeffriess.
Failing to declare OnlyFans income can lead to severe penalties, including hefty fines and legal action. The ATO can trace undisclosed income, making honest declaration imperative.
“Due to the unique nature of OnlyFans, seeking advice from a tax professional is highly recommended. A tax professional or business advisor can clarify deductions, GST, and other nuances, helping Creators navigate tax obligations effectively. For those worried about ending up with a large tax bill at the end of the next financial year, PAYG installments may be a better option,” added Jeffriess.
For unlimited earning opportunities, the platform can be ideal, especially for Creators who have educational, inspirational, or entertaining videos to share. However, understanding tax obligations and seeking advice ensures Creators can sleep at night knowing their finances are in check.
