IRAS Taxing Bloggers – Come Let’s Break It Down

So it is the talking point these couple of days among blog publishers (bloggers) and agencies who engages bloggers or influencers. The whole IRAS issuing letter to bloggers asking them to file their income tax is causing much destress amongst the blogging community in Singapore. With Income Tax e-filing due in a month’s time, all who have been blogging, attending media invites, accepting media gifts, going for previews etc are confused as to whether or not they need to file for tax. The general sentiment I’m getting from those bloggers who are discussing this, they are not trying to escape from filing their income tax, the big question is where, what and how should they start?

When IRAS sent out the letter and published it on their site, I hope they have done enough research and focus group with bloggers, media owners and even agencies to find out the ins and outs of the whole ecosystem before taking any action. From the looks of the slightly-longer-than-one-page very abstract and none specific letter they published, this does not seem like a very well thought out plan.

Let’s all break the whole ecosystem down and look at the many parts, facts and factors that should be taken into consideration before this IRAS tax guideline is published.

Breaking It Down

Basic of Blogging

Blogging picked up many years ago by many, and most started off as individual journals and diary sharing their daily lives and experiences. Blogs were read by family, friends and people who are curious about your life. Soon some blogs get more attention than the rest and this is when some PR agencies realised these blogs have got potential to reach their client’s target audience online. And this lead to bloggers starting to receive invites to press events, product launches, media tasting and all the “oh-so-glam-feel-but-seriously-a-lot-of-work-after-attending-events” stuff. But still back then it was fun and kinda awesome being recognised as reputable bloggers and this made more bloggers want to create better content that people will actually read.

Blogging Turned Income Generating Opportunity

Fast forward to today, many of these reputable bloggers have evolved to become well known online publishers that gets hundred thousands or even million of hits on their sites monthly. They have evolved to become media owners and operates their site as a business. Some running it with registered business entity and some still doing it as a hobby and may not have come to their mind that all this extra “bonus” they are getting or earning from their blogs are considered taxable income.

Blogging – Fifty Shades of Grey

Sometimes I’m not sure if I want to be labelled as a blogger, especially in today’s context, a blogger or an influencer brings along a whole lot of different expectation and perception by different individuals. Some see bloggers/influencers as wannabe who just want attention, some see the group as nuisance causing unnecessary disruption to businesses with their frank reviews that the place sucks, some see the group as superstars lusting over their always-look-great shots on Instagram and a whole lot of different views.

For the record, I see myself more as a content creator for multiple sites, online platforms and blogs. I create content online and secretly hope people will read, like and share the content I publish.

But what does it really mean to be putting one self out there to be seen as a public figure/ blogger/ influencer? Being a well-followed, well-read blogger/influencer isn’t simple nor can it be done easily overnight with just a click of a magic button. Many worked their ass off in the starting phase to be who they are today. And now all these hardworking individuals whom may not be getting paid thousands or even hundreds of dollars in cold hard cash have to be subject to tax for none monetary benefits. Many are just lost and unsure of what they should do so that they do not get into trouble with IRAS.

Brand and Bloggers – The Mutual Exchange

For years brands have been engaging bloggers and treating them as media journalists and online influencers. Brands invite them to check out their newly opened restaurants and sample some food, they send product samples to try, brands provide products on loan to bloggers for review purposes, and some lucky ones get gifted/ seeded with products and services to use and keep. All these (most) bloggers get nothing in terms of cash remuneration, and instead they spend time and money traveling to attend these invites, trying the products and then lots more time producing their content for publish online.

So now IRAS wants to tax on these experiences and non-monetary benefits, how should then bloggers record them in their book of accounts? Let me illustrate an example:

Income
Invite to opening ceremony of ABC cafe and ate a meal – $100
Received carton of drinks from XYZ – $18
Invite to stay at hotel – $300
Foundation received for trial – $40
Transport allowance from agency – $50

Expenses
Purchased of camera to create photo content for publication – $1,000
Taxi ride to opening ceremony of ABC cafe – $40
Taxi ride to hotel stay – $30
Lost of income from no-pay leave taken to attend event – $150
Purchase of other cosmetics to complete the foundation trial review post – $300

Profit/Loss: -$942 (See! Blogger made a lost!)

Above example might not be realistic but if IRAS really want bloggers to record all of the benefits they get and expenses derived from the need to render the services (i.e. a piece of published content), then the above is what bloggers have to keep track and declare in their Income Tax filing exercise. Not sure this is even possible considering the many things that could have taken place the entire year and since no one has been keeping track of all these, how would it be possible to do a proper declaration by 18 April?

Putting a Price Tag To Every Media Experience Is Not Possible

Say a PR agency invites the blogger to attend a meet-and-greet session with a Minister to discuss issues on some new policies. During the session, drinks and food was served. After the session, blogger publish an article about the session and shares photos of it on their Instagram account; hence will be seen as a service was rendered which was derived from the invitation where goods (food and drinks) were provided. How do we declare this?

Only Apply to Self-Employed

Quoting from the article published on The Straits Times:

Some bloggers also said that if non-monetary benefits are taxable, the same norms should apply to journalists, freelance writers, travel hosts and other people who receive free gifts for work.

Iras said the same standards apply to any self-employed people. But non-monetary benefits are not taxable for staff working in a media company, for instance, if they represent the company.

The keyword here is SELF-EMPLOYED or if you are ascertained (found out for certain) you are carrying out trade or business through your blogs/site/social media channels. SOOOO if you are not running your site like a trade or business, i.e. you don’t ask for payment in exchange for a mention or post, nor do you earn any form of income from your site or social network, then you do not fall under the category of self-employed. And hence not liable to file tax for your blogging activities.

Some other scenarios to think about:

  1. Hobbyist writers contributing content to sites/blogs – they do not get paid and are not carrying out any trade or business. They enjoy writing hence they publish online. These writers attend a media event sent to the publication because he is interested in the topic/product, writer gets gifted the product to use. Writer published an article about the launch and a review of the product. Does this writer need to declare tax for the item he received?
  2. An online publication with a registered business (media company) with ACRA, pays a freelance writer to attend and cover a launch event oversea. Trip and everything provided for by the brand, writer attends and write a piece on the publication. Writer declares income received as freelancer (self-employed) when filing for his personal income tax. Since publication is paying the writer, he is hence considered staff working in the company right? So does the registered business need to declare the cost of this trip as part of the business income?
  3. A blogger runs Google Adsense banner on his site. He gets $300 in a year from Adsense. Besides this $300, he also received list of products, free trips and other non-monetary benefits during the year. Does he then be considered a trade or business? And will he then declare all the non-monetary benefits as income in his personal tax?

There are 101 other scenarios that can take place and the blogging scene here in Singapore are still considered new and not matured yet as compared to those in the UK or US, where bloggers run their site like a media company. So dear IRAS, please enlighten the bloggers in more in dept information and give a more structured guidelines as to who needs to declare as self-employed, what should be declared, who’s exempted, and how they can go about doing all that’s necessary before the 18 April deadline.

If this letter was issued a year ago, to preempt the bloggers that they need to start filing for tax the following year, then they would have been better prepared and know how to react now.

To all my blogging friends and communities, please chill and don’t worry too much. Many of you are not running a trade nor business, so don’t worry about it ok. For those who are, and is looking at formalising the whole “blogging business” thing, I’ll suggest you read up on the how-to guides as a sole-proprietor or a limited liability partnership on ACRA website here. It is pretty straightforward really and start keeping proper records of all the ins and outs. See my posts on recording transactions for business for some tips.

Lastly…

Stay Calm and Blog On!

You Get Paid, Now Its Time To Pay

IRAS tax blogging

It’s Income Tax filing time in Singapore and some bloggers were shocked to receive the news from IRAS that they have to file for tax too. Yes dear, you are paid by brands, agents and agencies for work done, and now it is time to pay your dues.

All individuals earning, deriving or receiving income in Singapore need to pay income tax every year, unless specifically exempted under the Income Tax Act or by an Administrative Concession. If you’re a Singaporean or have been staying in Singapore long enough, you know there’s no free lunch here in Singapore. As long as you receive payment in return for a blog post, a shoutout on Instagram or sharing of a post on your Facebook page, all these are taxable income.

However, there’s one thing that’s very grey in the IRAS FAQ for Social Media earning. It is the part where benefits or in-kinds have to be declared too in our Income Tax. See the last point in the document published on IRAS website here.

IRAS-IncomeReceivedfromBloggingorSMMActivities

Except for that in-kind and invitation declaration which is rather ambiguous cos not everything can be placed with a price tag, the rest of the points are pretty standard. You get paid, you got to declare to IRAS.

If you are unsure how to go about doing it, or what you need to keep track etc, here’s some basic guidelines which I’ve been doing for the past few years. Hope this will be useful for you.

Get Yourself Registered

All self-employed persons must report the income earned from their business operations as business income, not salary. The business income is part of the total personal income which is taxed at individual income tax rates.

In 2013, when I knew I am going to start getting paid for work done or blogging, I registered as a sole-proprietor so I will make it a point to have all my earnings and expenses recorded properly and done right. This is especially helpful too when come to applying for say childcare subsidies and all the other financial declaration stuff one needs to carry out when buying a house, taking a loan, apply for credit card etc.

Keep Proper Records of all In and Out

Having gone through business school in polytechnic helped me paint a better picture of what needs to be done when running a business on my own. To help me keep track of all the income and expenses, I use a free accounting and invoicing app online. I’ve used a couple of other paid and free apps before this, but since the day I started using Waveapps, it has become my trusted business solution which I recommend to all my friends. It not just help you with the daily quotation and invoicing, it also lets you record your expenses, upload receipts and generate your statement of accounts and profit and lost statements too. And it’s totally FREE! Yes you see banner ads at the side but it doesn’t bother me cos the app is really very useful.

waveappsdashboard

Preparing For Income Tax Filing

This is the time of the year where I will make sure my records in Waveapps is up to date and accurate. Once that is done, with just a few clicks I get an overview of how much I’ve made over the year and how much I’d spent. All listed in proper accounting records and labelling. With my profit and loss statement, I can then prepare the 4-line statement for sole-proprietorship Income Tax declaration on IRAS. Use this step-by-step guideline on IRAS website to help you come up with the 4-line statement.

Basically you’ll need to know:

  1. Revenue – How much money you received in total for the year
  2. Allowable Business Expenses – How much money is spent in order to run your business or deliver your service E.g. advertising such as boosting of posts on Facebook, transport claim for business activities, phone bills for business etc.
  3. Profit/Loss – Revenue LESS Business Expenses

*One of the four lines statement was left out above as there’s no Cost of Goods Sold in service industry, which in the case of this post, blogging.

With the above you’ll be able to declare your income on IRAS. The profit declared may seem a lot at first glance, but after all the other rebates that most of us can claim for (especially parents and wife), the final TAXABLE Income may be less than $20,000 which will not be taxed in Singapore. So technically right we don’t have to worry too much about the need to declare our earnings from blogging or social media activities to IRAS.

So now that you know your obligations to file tax, go get all your finances sorted out and e-file by 18 April 2016.