In today's digital age, social media influencers wield significant influence and often enjoy lucrative partnerships with brands. However, amidst the glitz and glam, it's crucial for influencers to be aware of their tax obligations. In this blog post, we'll explore the tax consequences that social media influencers need to consider in South Africa. 

Understanding Tax Obligations

As a social media influencer in South Africa, it's essential to recognize that income earned from brand collaborations, sponsored content, and affiliate marketing is taxable. Whether you're receiving payment in cash, products, or services, it constitutes taxable income that must be declared to the South African Revenue Service (SARS).

Declaring Income

Social media influencers are required to register as provisional taxpayers with SARS if their annual income exceeds the tax threshold, which is currently R95 750 for under 65 year olds. This means filing provisional tax returns and making payments towards their tax liability in two installments during the tax year.

Please see our Provisional tax Guide for more info.

Deductions and Allowable Expenses

Fortunately, social media influencers can offset their taxable income by claiming deductions for legitimate business expenses incurred in generating their income. These may include expenses related to equipment (such as cameras and computers), marketing and advertising costs, professional fees (such as graphic designers or photographers), internet and cellphone expenses, and travel expenses directly related to business activities. If you do claim travel expenses, don't forget to submit your detailed logbook to SARS. You can always make use of TaxTim's free logbook app.

If you don't already have a way of keeping track of these expenses, you can use  TaxTim's small business workbook. 

Record-Keeping

Maintaining accurate records of income and expenses is crucial for tax compliance. Social media influencers should keep detailed records of all earnings and expenses throughout the tax year. This includes invoices, receipts, contracts and bank statements. Digital tools and accounting software can simplify record-keeping processes and ensure compliance with tax regulations. 

You can also use TaxTim's Expense Tracker App to help you store these receipts safely.

Value-Added Tax (VAT)

If you earn more than R1m in a 12-month period from your influencer activities, you will be required to register for VAT with SARS. If registered for VAT, you will need to charge VAT on all your invoices to clients and pay this over to SARS. However, registration for VAT also means you can claim input VAT on business-related expenses, potentially reducing the overall VAT amount you need to pay SARS.

Conclusion

While the life of a social media influencer in South Africa may seem glamorous, it's essential to understand and comply with tax regulations to avoid potential penalties and legal issues. By staying informed about tax obligations, keeping accurate records, and seeking professional advice when needed, influencers can navigate the tax landscape effectively and ensure long-term financial success.