In the realm of social media, South African influencers have gained immense popularity, amassing followers, likes, and shares. There’s a prevalent misconception among them that their earnings are exempt from taxation. In truth, income generated from their influencer activities, including sponsored posts and partnerships, is fully taxable and must be declared to the South African Revenue Service (SARS).
The digital landscape has revolutionised the way individuals earn income, allowing influencers from various niches, such as fashion, fitness, lifestyle, and content creation, to leverage their online presence for financial gain. Despite their significant influence over audiences and brand partnerships, many influencers are unaware of the tax implications associated with their online ventures. This oversight can have serious consequences, because a failure to disclose income to SARS intentionally constitutes tax evasion, a criminal offence with penalties, including fines and imprisonment.
One prevalent misconception, particularly among influencers earning income from international sources, is that payments from abroad are not subject to taxation in South Africa.
South African tax residents are required to declare their global income, regardless of its origin or deposit location. Even having income deposited into a foreign bank account does not exempt one from tax obligations in South Africa.
The question often arises: “How will SARS know if I don’t declare my income?” The reality is that attempting to conceal income from SARS carries far greater risks than compliance. Banking institutions worldwide share information with revenue authorities, enabling SARS to access details about foreign and local bank accounts. Thus, there’s no hiding from tax obligations.
In South Africa, personal income tax rates vary on a sliding scale from 18% to 45%, depending on the earnings within the tax year, which runs from 1 March to the end of the following year February.
Navigating the complex terrain of tax compliance can be daunting for influencers who perceive their careers as operating in a grey area beyond the reach of tax authorities.
The advent of digital auditing tools has made concealing income increasingly difficult. To ensure compliance:
- educate oneself about tax obligations and seek professional advice if necessary;
- maintain meticulous records of income and expenses, including earnings from all platforms; and
- practise transparency by proactively disclosing earnings to SARS and fulfilling tax obligations promptly.
The belief that influencer income is tax-free in South Africa is erroneous. Influencers must acknowledge their fiscal responsibilities and adhere to tax laws to safeguard their financial futures. By embracing tax compliance, South African influencers can avoid the repercussions of non-compliance and ensure their long-term financial security.
Jonty Leon is the managing partner of Leap Group, which helps expatriates comply with their South African tax obligations.
Disclaimer: The information in this article does not constitute legal or tax advice that is appropriate to every individual’s needs and circumstances.
