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Tax and influencers · Tax Break: South African tax for professionals

• 0:11
  Welcome and thank you for joining me for Tax Break.
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  This is a podcast about South African tax for South African
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  tax professionals and practitioners.
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  My name is Peter Flanagan, and in each episode I share my views
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  with you on a topic or a recent development in South African
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  tax. And I've tried to keep the
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  episode short enough that you can listen to them whenever
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  you've got a few minutes to spare.
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  Now today we are talking about, of all the things we can talk
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  about how influencers are text. Where I got to this rather
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  strange topic is that someone forwarded me an article from one
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  of the electronic news websites with it spoke about how the
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  these influences are taxed. And it's sort of great that the
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  perception that there might be a change to how that works.
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  And a day or so later, I got another e-mail actually about
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  freelance workers, but also referring to something about the
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  influences and how they are text.
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  So that got me thinking about, is there something that I'm
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  missing as to how these influences or text?
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  There's no special rules to them.
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  I'm not aware of any court cases specifically dealing with
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  influencers. And when I started doing a bit
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  of reading or searching on the Internet, I came across a media
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  released by SASH on their website where they indicated
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  that they've started a specialist segment unit for
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  influencers. Like you've got the the LBC or
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  the INET with individual unit. There's a unit like that for
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  influencers now, right? So let's talk about these
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  influences and, and where the possible tax issues may be.
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  I think it's a good starting point would probably be to ask,
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  but what exactly is an influencer?
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  Who would be an influencer? So, and I, I think it's a term
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  that it's probably quite difficult to pinpoint and define
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  to say, but only these people are influencers.
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  So from the sash media release, it seems as if it would be quite
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  safe to describe an influencer as someone who uses the social
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  media influence and network to provide marketing type of
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  services. So I listen to quite a few of
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  the US podcasts and they've got something that they call
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  affiliate marketing where they they would talk about the
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  product and as they talk about the product, they've got the
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  link on, they do the product on the podcast.
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  And if you type in this specific code, you get some sort of a
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  discount. So I would guess the other side
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  of that is that they then also get the Commission for referring
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  customers to the to the supplier of that product.
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  I would also guess that if you're looking at influencers
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  who we need to the choose and demonstrate how to use specific
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  products, that they may also get some of those goods or services.
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  So they that could be their compensation.
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  So I should also refers to freelancers in their in in the
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  press release or the media statement.
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  Now freelancers, it's not a new concept, but I would, I would
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  sort of take from that, that in the space of of independent
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  marketers in the same line as as influencers, there's, there's
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  probably quite a few freelances also working in that in that
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  area. In a marketing context, when we
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  look at the tax sash confirms that they are really taxed in
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  the same way as any other person.
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  So there is no special rules to say that they are tax different
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  or that they've got their own tax regime or something like
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  that. Now, I think what could be
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  different is probably the way in which they are paid to say that
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  they might get goods or services as benefits rather than than
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  cash and the way in which they are engaged with not and paid
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  with not typically. Or maybe the typical way in
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  which employees are paid through, for example, a payroll.
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  So the, the, the, the method of payment and the way in which
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  they receive that payment may be different from other taxpayers.
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  So I've, I've given a few aspects of, of, of these
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  influences that may have tax issues or tax challenges
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  attached to it. A bit of thought.
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  The first one is when we talk about their income.
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  Now I think if you look at the definition of gross income, it
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  is quite clear that that includes cash and non cash
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  amounts. So it's clear that it it applies
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  to amounts whether in cash or otherwise.
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  And this case law, for example, the Premiere Renaissance case,
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  that specifically deals with the context, well, with the concept
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  of amount in the context of of of non cash consideration, where
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  the court held that if something has got the money value, then it
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  is an amount. So way they might be confusion
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  is to say that if you're not looking at something like a
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  fringe benefit where there's a specific provision telling you
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  how to value that amount, it could be debatable, but that
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  doesn't detract from the fact that you've still received an
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  amount. So it might be a bit more open
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  for interpretation as to how do you determine the value of that
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  amount, But there is an amount nonetheless, if we then go on.
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  So there's definition of gross income also requires that the
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  amount must not be of a capital nature.
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  So that distinction between capital and revenue amounts,
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  there's a lot of case law to support that.
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  If you designedly seek and earn them a go out to earn an amount,
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  then it is revenue rather than just fortuitously receiving an
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  amount. So again, I, I would think that
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  if you've built up a strategy to grow your social media network
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  and your influence and you're using that to earn an income,
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  then I would think it's fairly clear that your receipts are
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  revenue in nature against your income.
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  You would then also be entitled to claim deductions.
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  Now again, there is no specific deduction applying to, to
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  influence search. So you're probably looking at
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  Section 11 A, which says that if you incur expenditure in the
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  production of income for purposes of your trade and it's
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  not of a capital nature, you are entitled to a deduction of that.
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  Now I would think that in the case of an influencer, it might
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  well be that the line between business and private expenditure
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  could get quite blurry. So if I think of an example, if
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  I like to run and you and as you run you take these nutritional
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  supplements. So that's my private
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  expenditure, that's my own, my own private costs, not nothing
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  to do with my business. But if someone starts paying me
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  to use these supplements and take a, a picture as I use it
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  and to promote these things, then I can imagine that it could
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  become debatable whether these supplements, for example,
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  whether I'm, whether that's a business cost or a private cost.
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  So I think the line between business and private expenditure
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  could become quite blurry. As I've also mentioned, I think
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  the third possible tax tax issue that may come up here is that
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  the method in which this this tax is collected.
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  So I would guess that most of these influencers would probably
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  be provisional taxpayers seeing they, they, they don't receive
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  remuneration in the normal traditional sense through a,
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  through a payroll from an employer.
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  But it is something that you need to clear carefully look at
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  the relationship that exists between the influencer and the
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  person who makes the payment of who gives the benefit to them.
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  So it could perhaps be that there is some sort of
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  relationship that is considered something that that, that is an
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  employment relationship, in which case they, it may well be
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  that, that the payer should withhold pay as you earn on
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  that. So I don't, I, I think that is
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  an issue that could come up and it that's important from the
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  perspective of the, the businesses paying these
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  influencers. The last tax issue I could also
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  think of is probably that that could come into play.
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  So similar to income tax, that is not a tax that's limited to
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  cash transactions. There is a good example in the
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  South Atlantic Jazz Festival case where the festival
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  organizers exchanged marketing space for goods or services from
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  the from from the, from the counterparties.
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  So it may well be that if, if an influencer crosses the 1,000,000
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  Rand threshold, whether it's in cash or not doesn't matter.
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  But it could be that that person then also needs to register for
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  that and that they need to start accounting for that even on the
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  on on the part that type of of of transactions then do to close
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  off. I I would suspect that if
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  there's no special tax rules for the influencers, the spatial
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  unit that Sasha established would probably be because from a
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  compliance perspective, the documentation and the evidence
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  that would exist for these persons and the typical tax
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  issues that they may face could be different from other persons.
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  And I would, I would guess that that's why such established a
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  specialist unit for them. So as with any other tax payer,
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  the burden of proof is on the tax payer and it would be for
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  the influencer to then keep documentation to, to prove that
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  the amounts that they receive should being is, is taxable or
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  not taxable, that they are entitled to deductions, those
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  kind of things. But the documentation may look a
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  bit different from from other taxpayers.
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  So it could perhaps be that their business model as a few
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  unique challenges that other taxpayers wouldn't necessarily
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  have. So to summarise, I think we can
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  we, we can definitely say Sarge published a media statement on
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  their website to confirm that they've created the segment for
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  these taxpayers. There are no exceptions in the
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  law specifically for them, which means all the normal provisions
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  apply. So you need to think about
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  things are gross income, your general deduction formula,
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  whether an employment relationship exists, whether you
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  need to withhold pay as you earn or not, and things like that
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  also come into play. That's it for today's episode.
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  If you've got questions or comments, you're welcome to send
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  me an e-mail. If you like the podcast, please
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  forward the link to the podcast to someone who you think might
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  also like it. And justice.
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  Always a reminder that nothing in this podcast is intended to
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  be tax advice or a replacement for tax advice.
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  The podcasters, just for information purposes.
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  Until next time, goodbye.