‘Fame and image’ tax crackdown targets celebs
AUSTRALIAN celebrities, athletes and high-profile influencers, such as bloggers, will be targeted in a "fame and image" tax crackdown.
The Federal Government believes too many famous Australians have found loopholes that enable them to pay less tax on cash earned from their face or image. When people become well-known or are paid to be online influencers, they often seek to licence their fame or image to a company or a trust, which means they can pay less tax.
Many people, especially online influencers on Instagram, Facebook and Twitter, are paid exorbitant amounts of money to wear certain clothes or highlight trends.
The Treasury Department is consulting on the crackdown and it is another move by the Government to ensure Australians pay their fair share of tax.
"High-profile individuals often earn income from a number of sources, including salary and wages, bonuses, business and investment income,'' a Treasury document says.
"However, when individuals begin to develop fame and a public following, they can also earn income from their fame or image.
"The exploitation can consist of advertisements, sponsorships, including wearing associated products, public appearances and the promotion of products."
By licensing their image to a company or trust, high-profile individuals can take advantage of concessional tax treatments, especially by income splitting.
If a celebrity sets up a trust, and a relative is the sole beneficiary who has no income, cash earned from a licence allowing another business to use that famous person's fame or image can be taxed much lower, costing the tax man.
"There is evidence that ... individuals are splitting or apportioning, lump sum payments to shift more income outside of their personal accessible income. Income splitting arrangements can be central to contract negotiations with high-profile individuals,'' Treasury says.
"The measure aims to ensure that all remuneration provided for the commercial exploitation of a person's fame or image will be included in the assessable income of that individual."