Early 2016, some Bloggers received IRAS query letters on their declaration of their blogging income and resulted in great discussion of this matter online.
Further Clarification on Taxability of Blogger’s Income and Receipts
In late 2016, IRAS clarified further on the details and taxability of blogging Income. IRAS states that there are 2 conditions to be met in order for an item received by a Blogger to be tax exempt on concessionary basis. However, on closer look, there are actually 4 conditions and they are:
- The item received by a Blogger must be non-monetary in nature;
- The item is for one-off testing or consumption;
- Value of item is not more than SGD100; and
- The item received by the Blogger must not be for services rendered.
The first condition states that it must be non-cash in nature. How about vouchers like NTUC vouchers and Popular Book Store vouchers? IRAS is likely to treat vouchers as cash because this will be in line with how IRAS treats vouchers as cash allowance in employee’s remuneration reporting. As such, it should be non-cash and non-vouchers to qualify for the exemption.
The second condition states that it must be for “one-off testing or consumption”. This means it is non-recurring in nature. How about testing different items from the same supplier? For example, a Blogger tested and reviewed a pair of audio speakers worth SGD90 in January 2016 and the Blogger was not aware that he or she will be engaged again for future review. In August 2016, a new model of speakers was launched and the same Blogger was given another opportunity to review the new pair of audio speakers. Must he report the value of items as income? It is likely that the first pair of audio speakers can qualify for the exemption because there is no intention for repeated reviews. However, once the supplier repeatedly uses the Blogger for subsequent reviews, the subsequent items should no longer be considered as “one-off testing or consumption”.
Value Not Exceeding SGD100
The third condition states that it must not exceeds SGD100. Therefore, if the value of the item is SGD100, it still qualifies for the exemption. What if the supplier is a GST registered person and the supplier price the item as SGD107 (i.e. SGD100 + 7% x SGD100), inclusive of GST. Should you consider the GST when you determine whether it qualifies for the exemption? IRAS approach is likely to be the value of item/goods inclusive of GST.
Furthermore, once the item is more than SGD100, the full value of item is taxable and not the difference between the full value and SGD100.
Not In Relation to Service Rendered by Blogger
The fourth condition states that it must not be for services rendered by the Blogger. This means that the item given to the Blogger must be:
1) An item to be reviewed (i.e. the blogger is commenting on this item online); or
2) A complimentary item with no obligation to provide any service.
For example, the review of a pair of audio speakers. If the pair of audio speakers is not more than SGD100 and it satisfies the other qualifying conditions, the Blogger does not have to declare it as income. However, if the Blogger receives a wireless earphone which cost SGD90 as an additional reward for reviewing the speakers, the earphone needs to be declared as an income even though it is not more than SGD100. If the Blogger receives a dress of SGD95 as a complimentary item and it is not in relation to any work performed, the Blogger does not have to report the value of dress as income.
IRAS may have to perform a third party confirmation (with the supplier) to verify whether the item given to the Blogger is for service rendered or for other reasons.
When should a Blogger declare his or her income?
When a Blogger’s net business income (i.e. Revenue from monetary and non-monetary items less allowable expenses) from blogging activities exceeds SGD6,000, the Blogger should declare it as self-employed income.
How does IRAS define “income from blogging activities”?
Any income received from blogging website and social media platforms like youtube, instagram, face book and twitter is considered “income from blogging activities”.
Bloggers who have not Reported their Income
IRAS is checking the tax declaration of Bloggers. Will IRAS prosecute one Blogger’s case to send a strong message to all the Bloggers? Will IRAS charge him or her under tax evasion or tax negligence? If you are a Blogger and wish to perform a voluntary disclosure to avoid a prosecution by IRAS and to pay lower penalty, we will be able to help.