South African influencers face tax scrutiny as SARS targets undeclared income and brand perks
South Africa's tax authority is focusing on influencers and their undeclared income from online content creation to partnerships. Influencers must declare all forms of income.
South Africa's social media influencers are under scrutiny from the South African Revenue Service (SARS) regarding undeclared income from their online activities. This initiative is part of a broader effort by SARS to recover R513 billion in unpaid taxes and achieve its revised revenue target of R1,840.8 billion for the 2024/25 fiscal year.
The revenue service has stated its "unrelenting" commitment to meeting this goal and is leveraging technology, including artificial intelligence (AI) and data analytics, to aid its efforts, reports IOL.
Mohau Lebese, Managing Partner at Accountants on Point, highlights that many influencers lack the necessary tax knowledge because their careers often originate from creating content at home rather than a traditional business background. He stresses that all forms of income, including non-monetary benefits, must be declared.
According to Lebese, "value in kind" benefits such as sponsorships, brand deals, free trips, and meals are considered part of an influencer’s gross income and must be reported on their annual tax returns. He explains that these perks fall under the definition of gross income.
A key distinction exists between informal freebies and formal agreements. If an influencer receives a product, like a gadget, to unbox and discuss on their platform without a formal contract, it's treated differently from a situation where they agree to promote a brand in exchange for that product or service.
In the latter case, SARS classifies the item as a form of income that must be declared. This clarifies that any arrangement where a product or service is provided in exchange for promotional services is a taxable transaction. Influencers must now pay close attention to the nature of their brand collaborations and accurately report all forms of compensation to SARS.
HOW TO LISTEN TO EAST COAST RADIO
1. Listen to East Coast Radio on the FM (frequency modulation) spectrum between 94 and 95 FM on your radio.
2. Listen live to ECR by clicking here or download the ECR App (iOS/Android).
3. Listen to East Coast Radio on the DStv audio bouquet, channel 836.
4. Switch to the audio bouquet on your Openview decoder and browse to channel 606.
5. Listen to us on Amazon Alexa.
Follow us on social media:
Image courtesy of iStock
Have a similar story or something unique to share? Email us at [email protected], we would love to hear from you!