I suppose it was only a matter of time before I blogged about this, especially since people (non-bloggers, readers, people who support what I do) have also been asking me about it. Recently, the local government made it very clear that local bloggers need to declare perks worth more than $100 that are given by companies. Of course, as a blogger myself, I do have several opinions about this but not all are conclusive.
One thing that came up in my mind was that micro-influencers, or bloggers that have a small following aren’t generally sponsored high-cost products and services anyway, so they wouldn’t really be affected by this classification of taxable income. However, there are also bloggers who do get sponsored items or services that are worth more, and hence those would definitely be taxable.
To be honest, I don’t get why it’s so difficult for companies to just pay bloggers for our work. Even if it’s a couple of hundreds, for a blog post, posts on social media, or even videos on YouTube and social media, work is still work and it needs to be paid. If brands aren’t going to open up about this and start compensating us for our time, effort and know-how, then bloggers will need to pay these taxes from the income they are making elsewhere, such as their full-time jobs. And if these bloggers are smart about their money, they would realise that this doesn’t make sense at all. If you’re a blogger and you are reading this, I really hope you realise the hole you’re digging if you do this.
Some of us may find this annoying, because now we have one more thing to deal with on top of companies not paying us for our work despite agreeing to do so, companies demanding too much of bloggers without even paying us for what we do or non-bloggers who firmly believe that bloggers should never be paid because blogging is “so easy” and is just a popularity game (it is not).
Some of us may find this refreshing. I know I do. I also know that there are people who believe that this should have been in place and strongly enforced since years ago, and that bloggers should all now be made to back-pay taxes. While this is quite ridiculous, I feel it’s more important we focus on the present and future instead of looking to the past to “punish the offenders,” or “reduce the wrong,” so to speak (just to side-track, it always baffles me to no end why some people just like to see others suffer).
So Many Unanswered Questions
For gifts that are unsolicited, it’s not a must that we blog or share about it online, so unless we do, I’m assuming we do not have to pay tax on it. I may be wrong, so if someone can clarify this, that would be great.
There are some questions that need answering too. If a company sends me an item that’s valued at $60 in January, and then send me another one valued at $50 in July of the same year, and both sponsorships are for two different campaigns, would that be considered a one-time sponsorship of $110, a combined sponsorship of $110 or would that be treated as two separate accounts and therefore not taxable? Also, I’m assuming that if a product is on loan to a blogger for a blog post (say, for example an outfit for an OOTD post), it’s not considered a sponsorship and the blogger should not have to pay tax for it.
If a blogger has a full-time job that does not legally allow him/her to take up another form of employment, and he/she receives sponsorships that are taxable (i.e. above $100 in value and all that), does this mean that this blogger is moonlighting illegally and therefore subject to the consequences of the law? After all if one is being reimbursed for work done, it is considered a job or form of employment (and hence the income tax).
Referring to the scenario given by IRAS: “A blogger receives a door gift worth $120 during a product launch. However, there is no obligation to review the gift. Tax treatment: Since the value of the gift exceeds $100, it has to be declared.” How is this then, different from giving a door gift to invited guests who are not bloggers, especially since many events are organised where guests include people from all walks of life? If these guests do not need to pay tax on these gifts, it is beyond reasonable for both the blogger and the event organiser (because now the blogger will have to charge for receiving gifts) that a blogger be expected to do so.
Referring yet to another scenario: “After reviewing a perfume, a blogger is rewarded with a handbag worth $98. Tax treatment: All monetary payments and non-monetary benefits are taxable if they are given in return for services rendered. In this case, the blogger has to declare the $98 as the bag is not for one-time consumption or testing.” There needs to be a clear definition on “in return for services rendered,” if IRAS is looking to tax bloggers on this. But even if there were one, this rule is redundant, because there are many other reasons for a brand/company to gift a blogger something without anyone being taxed for anything. What if said gift is a $20 mascara? Is that going to be taxed? Also, no one can be so sure to say that a bag is not for one-time consumption or testing. What is meant by a “one-time consumption” anyway? I can only think of food tastings or mask sheets. And, do these people not watch YouTube videos? If the blogger does receive said bag and then writes a short review on it, would it then not be taxable, since it would have been tested?
In any case, I highly recommend reading this FAQ sheet from IRAS. The good thing is if the total amount of your sponsorships don’t add up to $6000 for the year, you don’t have to declare it. If you are a blogger that earns more than that from your blog, you are eligible for tax deductions if your expenses are “wholly and exclusively incurred in the production of income.” Then again, how do you compare if one blogger receives a one-time sponsorship worth $3000; another blogger receives 10 sponsorships worth $250 each; and yet another receives two sponsorships worth $2500 each, plus two others worth $90 each?
What can we bloggers do?
Moving forward, although it may be a challenge to keep track of all the items above $100 that are sponsored to us, it is not impossible, and it can only be wise to start now. That said, keeping track of all the items that would be considered taxable by IRAS’s standards is another issue all together. Anyhow, I’ve made a Google Excel sheet which you can download and use to keep a decent record of your sponsored items and services.
I also strongly feel that if you’re a blogger, you need to stand up for yourself and charge reasonable rates for your work. Even if you don’t have a huge following – and companies LOVE using this as an excuse, besides others, to not pay you – you DO have one and you DO have influence. If you have been able to convert your readers into customers for your previous clients, use the data to prove that you can do the same for future clients. Get testimonials from brands you’ve worked with to build your portfolio.
Most importantly, stand your ground. A lot of times, companies and brands just want to see how much they can get away with. They know you have value that you can provide, and that’s exactly why they’ve approached you in the first place. If you’re OK with them not paying you and if you don’t have to be taxed for anything, it’s fine, nobody gets hurt. But if they refuse to compensate you, move on. Build a better relationship with a company that truly values you and can help you to grow as a blog. Take the time to build your blog such that it reaches a point where companies cannot refuse to pay you anymore.
You have value as a blogger – you need to know this. Don’t allow yourself to be bullied, don’t be too desperate to immediately want to reach the stage where major influencers are right now. You do you, and you do it right. Everything else will fall into place with time.
Blog on my lovelies,