Adult entertainer Tasha Paige, from the Gold Coast, was gobsmacked when her tax owing was calculated to be $86,000 but, after her accountant double-checked her work more recently, that figure was revised to just over $176,000.
Running an OnlyFans account for profit is considered a business in the eyes of the Australian Taxation Office (ATO) and Paige told Yahoo Finance that, although she recently cracked a seven-figure income, her earnings for the last financial year were less than that. However, her 2022-23 income was still substantially over the $18,200 tax-free threshold.
Paige has an ABN and a company set up for her site but was frustrated that the 10 per cent goods and services tax (GST) applied to her and made up $26,000 of her bill.
"Obviously, the government isn't a very big supporter of sex work or anything, a lot of banks don't recognise it as an actual job so it's a lot harder for us to get property," she told Yahoo Finance.
"Then it's annoying when [the government] are like, 'Oh, you guys have to pay GST now' when we're not actually, you know, selling a product per se. That kind of shows that they see us as a product because we earn by selling ourselves online.
"It's just a bit frustrating because we're not actually giving them anything that's an object; it's all virtual".
If content creators make more than $75,000, they "have the same GST obligations as everyone else", the ATO states on its website. This includes OnlyFans.
But, according to accountant Michael Wilczynski, creators like Paige should be aware that as OnlyFans is an overseas-based platform "no GST will be applicable to their income as they currently do not provide a split between local vs overseas sales".
"If Tasha's annual earnings from OnlyFans and other sources exceed the threshold of $75,000 in annual turnover, she is generally required to register for GST and remit GST on her earnings," Wilczynski told Yahoo Finance.
"The key part that Tasha needs to be aware of is that overseas income is generally GST Free."
GST is a separate component to your taxable income, he said.
"GST is a consumption tax that is collected by sole traders or businesses on behalf of the government. It is not considered part of your income. When you collect GST from your customers, it is held 'in trust' for the government, and you must remit it to the ATO. Your taxable income is determined by subtracting your business expenses from your total income."
From less than 6 figures to over $1 million: OnlyFans financial success shock
Paige - who offers a 12-month subscription to her OnlyFans for $60 - said the tax bill took her by surprise and that, despite having her accountant "crunch the numbers", there was little she could do to drive it down because it's "relative to my income".
"I think it's just crazy. Before I started OnlyFans, I wasn't even earning six figures a year. So, to have that be my tax bill is quite confronting, it was definitely shocking," she said.
The Australian woman said the initial "hurt" wore off after she took "a few days to process".
"If you've got to pay more tax, it just means that you're earning more money. So, you've just got to look at it from a positive aspect, I guess."
"It took me three years to get to this point. So, it's definitely not a job that's quite easy to get to. But, finally, the hard work has paid off, which is refreshing."
Paige will need to pay the amount back to the ATO by the February deadline. She has the option to pay off the bill in installments but has planned to transfer it over in bulk.
"The debt would stress me out too much otherwise," she said.
To avoid a big bill, content creators can register for Pay As You Go (PAYG) installments, which means the ATO will send out a quarterly bill.
Tools used to create content can be claimed back as a business expense, however, it would need to be determined how much was being used for business purposes.
The ATO said it was unable to comment on the tax affairs of any individual or entity due to its legal obligations of confidentiality. However, a spokesperson told Yahoo Finance the ATO had "sophisticated data-matching and analytical tools" and it could "identify people who may be under-reporting their income from a range of activities".
"Where we identify people that have made a genuine mistake, we will support them in understanding the law and get them back on track," the spokesperson said.
Accountants' tips for tax time
Register for GST: "For OnlyFans creators, you will most likely be refundable as the majority of expenses incurred in Australia will have a GST component that will be claimable back. Maintain records of your income and expenses related to your content-creation activities. This will save you heaps on time at the end of the year."
Understand deductions: "Be aware of the different expenses you can claim as deductions to reduce your taxable income and consult a tax professional. It's advisable to work with a tax accountant who understands the specific tax regulations for content creators.
Budget for tax: Set aside a portion of your earnings for tax obligations, including GST and income tax. I recommend at least 25 per cent, so you have it ready to go for when the ATO comes for it.
The group of Aussies feeling 'tax paralysis'
Sole traders were identified as a group holding back on lodging their tax returns, according to Sole Trader Pulse by tax service Hnry.
Almost half of self-employed people surveyed were yet to submit their tax return, despite the deadline looming, and this could be attributed to lower rebates and a higher cost of doing the financial admin.
They found it was costing people about $1,000 to prepare their returns, which, on top of the six hours a week it took to keep on top of, made tax time a "confusing and stressful period”.
“Add to that the pressure of tax time while forking out a large sum to potentially receive a smaller rebate following the phasing out of the low and middle income tax offset, and it’s no wonder a large proportion are putting off submitting their return," Hnry Australia managing director Karan Anand said.