Edited version of private advice

Authorisation Number: 1052104487216

Date of advice: 6 April 2023

Ruling

Subject: Assessable income - live streaming

Question 1

Is the income you receive from your live steams on TikTok assessable income under section 6-5 of the Income Tax Assessment Act 1997?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 20YY

Year ending 30 June 20YY

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

You are an individual who performs live streams.

You signed up to perform live streams with TikTok, who promote live streams as a way to get sustainable earnings.

You had to acquire 1,000 followers before you could begin to live stream.

During your live streams on TikTok you perform various activities. These live streams do not take any particular form or structure.

Your viewers are from around the world.

You occasionally receive gifts from viewers during these live streams. These gifts can be exchanged for money.

To receive gifts, you had to change your TikTok settings to allow gifts to be received. The default setting for receiving gifts is switched to off.

You do not perform specific acts to produce gifts.

You stated the gifts are not guaranteed, are random and not based on anything.

You stated the gifts can vary from $X-$X a night, with the average being $X a night.

You perform livestreams on TikTok for X days per week at an average of X hours per week. Your average livestream is X hours.

You have taken no steps to form a business and you view this as a hobby.

You do not rely on these gifts.

You work full-time in a specified role.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a taxpayer includes income according to ordinary concepts (ordinary income).

Ordinary income has generally been held to include three categories, namely income from rendering personal services, income from property and income from carrying on a business.

Other characteristics of income that have evolved from case law include receipts that:

•                     are earned

•                     are expected

•                     are relied upon; and

•                     have an element of periodicity, recurrence or regularity.

TikTok advertises the livestreams as a way to make income. Before you could live stream, you had to gain at least 1,000 followers. Additionally, you had to make the choice to accept gifts and manually change your settings to allow gifts from viewers. By default, the receiving gifts option is turned off.

The income you received from TikTok has the characteristics of income:

•                     You received the income by providing a service, in this case it is in the form of entertainment

•                     You constantly expect to make on average $X a night

•                     You perform live streams X times per week for around X hours ensuring the income is regular and recurring

You have provided a view that this is a hobby but, in this case your behaviour is synonymous with professional streamers in the industry. Professional streamers host 'just chatting' streams which focus on interacting and talking with people in the chat and these streams also have no defined structure. They conduct these streams regularly though out the week to generate income. You conduct streams in a similar manner to the industry regularly throughout the week.

From the information you provided we can assume you make in the range of $X yearly. This is not an insignificant amount nor is the amount of time you spend streaming on a regular basis. The amount of income you receive from streaming suggest it is your primary source of income.

Whether a "gift" is assessable income depends on the character of the gift in the hands of the recipient. Hayes v FC of T (1956) 11 ATD 68 reaffirmed that the question in each particular case is as to the character of the receipt in the hands of the recipient and that the test to be applied is an objective, not subjective, one. Relevant factors to consider have been provided in Taxation Ruling IT 2674 Income tax: gifts to missionaries, ministers of religion and other church workers - are the gifts income? and include:

•                     how, in what capacity, and for what reason the recipient received the gift

•                     whether the gift is of a kind which is a common incident of the recipient's calling or occupation

•                     whether the gift is made voluntarily

•                     whether the gift is solicited

•                     if the gift can be traced to gratitude engendered by some service rendered by the recipient to the donor, whether the recipient had already been remunerated fully for that service

•                     the motive of the donor (but it is seldom, if ever, decisive), and

•                     whether the recipient relies on the gift for regular maintenance of himself or herself and any dependants.

On such an objective analysis, if nothing more appears than the receipt of some money or property, what is received is capital not income. However, if the facts surrounding the transaction show that the payment or transfer was made without legal obligation but is nevertheless so related to the recipient ' s employment, or to services rendered, or to a business carried on that it is, in substance and in reality, not a mere gift but the product of an income-earning capacity, it will be regarded as assessable income of the recipient (Taxation Determination TD 2006/22 Income tax: is disaster relief money received from charities, to which local, state or federal government or their agencies have made payments, assessable income of taxpayers carrying on a business?).

In your case the "gifts" received are as a result of services rendered in the form of entertainment through your live streams.

The money you have received through TikTok has the characteristics of income and is not considered to be a gift, rather it is the reward from your personal services. As such it is considered to be ordinary income and will be assessable under section 6-5 of the ITAA 1997.

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