Blogging and Taxes : Income Tax Guide for Bloggers

Source : ShutterStock Copyright Andrey_Popov

Disclaimer
This is #notasponsored post. This article is only meant to be informative and not meant for tax advice. For tax advice , do refer to your tax consultant ( accountants, lawyers, etc) For completeness, do read this article in conjunction with IRAS Starter Guide for Self Employed. If in doubt, IRAS starter guide will take precedence over any of the information stated below. The information is meant for hobbyist blogger. For career blogger, options such as setting up a company can be explored as an alternative.

Background
On March 15, a bombshell was drop on bloggers. An article on Channelnewsasia reported that bloggers receiving reminder letters from IRAS to declare income for 2015. In addition it is clarify that products and services received via website are to be included with any cash income for the annual income tax.

The news had send the blogsphere into a tizzy. The aftermath of these resulted in bloggers taking their case on line and justifying the need to tax for products and services in kind when they do not actively seek to 'earn' them. In addition there are debates as to why counterparts such as press or publication do not need to declare the same products and services reviewed on mainstream media. Given that most bloggers are doing this as a hobby, the idea of taxation would be far away from one's mind.

For this post, we do not debate the justification of such taxes. Instead, using the information found in IRAS website , this guide was formulated to understand how to declare tax and what may be needed for this declaration. As we are not tied to agency, it would be difficult for us to assess the value of 'goods in kind'. Since most hobbyist bloggers would be in the same shoes, this guide may be useful during this period.
 
More information on IRAS information for bloggers can be found here.

Income Tax Rates
To understand what you have to pay as a blogger, you need to know the tax rates of Singapore.
The following is the income tax rate for local residents for 2012-2016

Source : IRAS

For 2017, it is noted that new tax rates will apply.

Source : IRAS

From the table above, it is noted that you only need to pay tax as an individual if you are earning a NET income of 20000 . From experience running this blog, that number is not easy to achieve. For the record our gross income is significantly lower than that number.

With this scenario in mind, for bloggers with only blog income as the main source and if you are only casually blogging , this income tax requirements may be a non issue. For bloggers with full time jobs, this added need to declare tax on blog might actually bring the blogger to the next tax bracket. Personally we feel that the latter scenario may deter full time employees from even considering blogging as a hobby.

You might also note that not all bloggers are subjected to taxation. If you only blog on a personal basis without any sponsorship or ads revenue on your blogs, you are most likely to be identified as one that does NOT have a a trade or business via the blog.


How to Declare Tax
Taxes can be declared via online or e-filing at revenue house where IRAS officers will assist you. You can also call individual income tax hotline at the 1800-356 8300 for assistance.

Do note you require the following information for tax declaration

1) SingPass / IRASPIN;

2) All documents and income details relevant for your filing, for example:
-for Child Relief Claims - Name(s), Birth certificate no./NRIC No. of your children;
-for Parent/Grandparent Caregiver Relief Claims- Name, NRIC No. of Parents/Parents-in-law.

For bloggers earning less than $100,000 per year, you only need to declare a 2 line statement
First Line - Revenue
Second Line - Adjusted Profit

If you make more than that, do visit IRAS for more details on how to file your taxes.

Revenue

Copyright : ShutterStock Copyright Manczurov

 The following are taxable under IRAS guidelines for bloggers
1) Cash payment for posts
2) Benefits in kind

Benefits in kind will include items such as meals, sponsored hotel stays, products reviewed and more. The list is not exhaustive and may include other income that you derived for services rendered or to be rendered by you. Any benefits whether monetary or in kind provided to your family and friends will be taxable in your name.

As bloggers it may be quite difficult to quantify what is revenue. Sometimes a media invite might constitute revenue if you have receive benefits such as goods in kind. At others, the lunch provided for such events might be excluded if you do not consume it or it is unrelated to your blog about the event. It can be a confusing line to be drawn,  but declaration of taxes would be to the best of your abilities. It would be better to keep a proper record should the need arises in case of dispute.

On 09/04 , new guidelines are introduced for bloggers

In this regard, bloggers/social media influencers will not be required to declare non-monetary

benefits if the following two conditions are met: 

(a) The product/service is given to them on an ad-hoc basis for one-off consumption or testing;

and

(b) The value of each product/service received does not exceed $100.If the value of the product/service exceeds $100, the full value of the benefit should be declared and be subjected to tax.

The $100 threshold does not apply to non-monetary benefits received by bloggers/social media influencers if it is a recurring supply provided over a period of time.

In a nutshell it means any products / invites below $100 in value and of a non recurring nature need not be included in the tax.

Examples 

• Bags for review - cost $100 : No Tax
• Phone for review - cost $150 : Tax - Declare $150
• Media invites (Entrance Fee) - cost $80 :  No Tax
• All inclusive trip to Disneyland hk - cost $2000 - Declare $2000
• Enrichment classes one time invite - Cost $50 - No Tax
• Enrichment classes x 5 times $50 per class - Declare $250

List is not exhaustive

For information on the latest guidelines, do refer here. 

For more information on what is taxable and what is not, do refer to IRAS webpage.


Expenses

Source : ShutterStock Copyright Yanatul

The good news for bloggers is that you can also claim expenses against this source of income provided the expenses are incurred wholly and exclusively in production of the income . However do note not all expenses can be defined as such. For more details , you should refer to IRAS latest guidelines for bloggers or IRAS starter guide for self employed.

Some of the examples of expenses that may be applicable in your scenerio

• Marketing cost of promoting your blog post
• Airplane ticket for the purpose of reviewing a overseas hotel ( only if the hotel is sponsored)
• Camera ( if you can prove that it is wholly and exclusively use for production of the income)
• Software fees ( for use wholly and elusively for the production of income)
•  Domain Fees

The list is not exhaustive. However do note that expenses that are personal and private in nature are not allowed as they do not relate to your business. This includes private transport such as car and the expense incurred ( e.g. petrol and car park) 

Rebates and reliefs
Another thing that you could use to reduce tax would be personal rebates and reliefs. The following reliefs/ rebates can be considered if you are s Singapore tax resident and if you qualify for it.

• Course fes relief
• CPF cash top-up relief * 
• CPF / provident fund relief: For self-employed/employee who is also self-employed * 
• CPF / provident fund relief: Compulsory and Voluntary Medisave Contributions *
• Earned income relief
• Handicapped brother/sister relief
• Life insurance relief
• NSman (self/parent) relief
• Parent/handicapped parent relief (for maintenance of parents, grandparents & great-grandparents including in-laws)
• Supplementary Retirement Scheme (SRS) relief
• Personal tax rebate (for YA 2015)

Voluntary Disclosure of Errors for reduced Penalty
Given that this is probably the first time bloggers realised that benefits in kind are taxable, there is a need to declare past income as well. IRAS allows voluntary disclosure of errors for such cases on a reduced penalty.

Information on voluntary disclosure can be found here.


Penalties for non tax disclosure
Penalties can be hefty for tax evasion or fraudulent claims. This could result in a find that fines that would be in multiplies of tax evaded. In addition possible jail sentences for serious tax offenses.

The best bet  is to declare all items and not risk the above situations.

Tips on an efficient tax declaration

Source : Shutterstock

Keep Records
For individuals, it is important to keep a record of the 'income received' . This could be in the form of excel sheet and keeping past email records. For expenses, do remember to keep the receipts for 5 years from the date of declaration in case there is a need for verification.

Declare all sources of income and expenses
When in doubt, declare all sources of income and expenses. Should there be disputes , at least you will not be in the position of tax fraud.

Manage your sponsorship wisely
Due to the recent clarification by IRAS , we will also be more prudent on accepting sponsorships for reviews. As much as we would like to feature everything related to family, we would be mindful of the tax implication. With most of our sponsorship done on a barter trade basis, it usually meant out of pocket expenses. Even if our intention is altruistic, pragmatism may takeover our good intention, especially if the added burden of tax eats into the ability to put food on the table for family.

With that is mind, we hope potential sponsors can understand our predicament in accepting sponsorships. That said, all bloggers should manage sponsorship wisely unless you are willing to pay for all reviews, especially if you do not have any intention to owning the product or services.


Bottomline

TheWackyduo.com take the stance that income earned be it in cash or in benefits as stated by law should be taxable . With everyone paying their fair share of taxes, society can benefit from this in an equitable manner. It is also worth while to note that with the latest guidelines on taxable income, 90% of the local bloggers would probably not be impacted in any way from  taxation.

As for bloggers and everyone, the dateline for tax declaration is 15 April and 18 April for paper and e filing respectively. If necessary seek advice from professionals in filing your taxes. The main thing is to remember to file your taxes!

 The above information is meant for information and does not constitute tax advice in any form. All queries are to be directed to IRAS. The Wacky Duo is not liable for any errors from reporting taxes a a result of this post.