How taxing: Bloggers surprised by Iras reminder to declare non-monetary benefits

How taxing: Bloggers surprised by Iras reminder to declare non-monetary benefits

With little more than two weeks to the income tax filing deadline, social media marketing agency Nuffnang has met with the Inland Revenue Authority of Singapore (Iras) to clarify the need to declare the non-monetary benefits-in-kind received by its bloggers and influencers.

The other major player in Singapore, Gushcloud, says it is also asking for a meeting with Iras, but no date has been set yet.

It wants to make clear the things to be declared and the industry's workings in terms of remuneration, be it in cash or in-kind, among other concerns, says its co-founder, Miss Althea Lim.

A letter from Iras to bloggers seems to have caught the blogging community by surprise.

Part of the letter, which surfaced on the Internet last month, said: "All non-monetary benefits such as sponsorships, products and services received are considered gains and profits from services provided as a social media influencer (including blogger, YouTuber).

"As such, the market value of such products/services will be subject to tax and must be reported."

MISTAKES

Despite the shock expressed by the blogging community, Iras has clarified that its stance is not new: It does remind self-employed individuals as they tend to make mistakes.

In other words, they may not be declaring their incomes correctly and therefore may not be paying the right amount of tax - and bloggers are among the group of people who are at "risk" of noncompliance.

Blogging as a hobby is not considered a business in general, says Iras.

But if it is done repeatedly for monetary and non-monetary rewards, it should be assessed as a self-employed person's income.

It does not matter if they have heard from Iras or not, or if they are doing it full time or part time.

Most bloggers expressed shock as they did not know that gifts-in-kind can be taxed.

When The New Paper on Sunday contacted full-time blogger Wendy Cheng, who goes by the moniker Xia­xue, she said she was surprised as this was the first time she received the letter from Iras.

The mother of one, who started full-time blogging in 2005, says: "The letter was very targeted - it was obviously for bloggers.

"It has never occurred to me that blogging has become a recognised profession over the years."

In response to the letter, she says she is "trying to collate things I've received in the past year and putting an estimated value to them".

For instance, she is going through her Instagram for advertorial posts in the past year.

STILL WAITING FOR CLARIFICATIONS

As for non-monetary benefits-in-kind prior to last year, Ms Cheng says she is still waiting for clarifications.

She says: "It's not fair for me to estimate (the value) now. The company may have given me a discount then, and it may not be applicable now."

She adds that in previous years, she declared her taxes based on her monetary income.

Iras says it is sending out letters, including to lawyers, doctors, accountants and tutors, as an educational approach.

Those who do not have all their income and deduction details by the tax filing deadline of April 18 have a grace period of one year to supplement the details by writing in, it says.

To help its bloggers, Nuffnang says: "We have a dashboard where our bloggers and influencers can log on to view their earnings, which helps them organise their income statements."

Miss Lim says Gushcloud has been actively reminding its contracted influencers of the tax filing deadline since 2013.

Besides answering their questions, it also conducts workshops and one-on-one chats with a tax expert, where questions about what is considered income and what should be declared are addressed.

The maximum penalty for omission or under-declaration of income without reasonable cause is 200 per cent of the tax undercharged.

For very serious tax fraud or evasion cases, the maximum penalty is 400 per cent of the tax undercharged.

What tax experts say

We put out some common questions to global mobility senior manager Mark Amatya and director Girish Naik with PwC International Assignment Services:

HOW WILL BLOGGERS AND INFLUENCERS BE TAXED?

Mr Amatya says the net income of bloggers and influencers, who are considered self-employed, will be taxed at the individual tax rates.

They range from 0 per cent to 22 per cent.

He says: "If the blogging activity is conducted via a company, the corporate tax rate of 17 per cent applies to income received by the company.

"Reliefs, deductions and exemptions are available to both individuals and companies."

HOW DO YOU VALUE A RESTAURANT MEAL THAT A BLOGGER REVIEWED OR AN OVERSEAS TRIP TO REVIEW FOOD FROM SEVERAL RESTAURANTS?

Mr Naik says: "The fair market value of the relevant benefit will be considered for taxation purposes.

"So, in the given example, the cost of the meal or travel expenses otherwise incurred by the provider could be considered.

"As a best practice, bloggers should request for receipt or statement of such items from the provider."

IS THE REQUIREMENT TO DECLARE NON-MONETARY BENEFITS-IN-KIND A NEW MOVE?

Mr Amatya says similar tax rules have been implemented in other countries such as the United States and Britain, where blogging is commonplace.

He says: "While Iras (Inland Revenue Authority of Singapore) is right to increase awareness regarding tax filing requirements within the blogging community, providing more detailed guidelines on grey areas such as valuation of the non-cash benefits-in-kind and the eligibility for claiming deductible expenses will be very helpful to facilitate compliance.

"An e-guide setting out the 'frequently asked questions and answers' would be very welcome."

chaihyn@sph.com.sg


This article was first published on April 3, 2016.
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