Much like the gig economy, where companies engage independent contractors for short-term projects, influencers are generally compensated on a per-campaign or brand-partnership basis. According to the newly released 2024 South African Influencer Benchmark Report, local influencers can charge anything between R3 000 and R18 000 for a single Instagram post and up to R8 000 for a reel. 

Globally, social media advertisement spend spikes by as much as 30% during the festive period, a trend echoed here in South Africa, meaning that local influencers are likely to earn significantly more during this time. However, with significant earning potential comes an even greater tax responsibility. Many influencers overlook the need to operate as businesses, a misstep that can result in serious compliance challenges.

Social media influencers are driving billions into the economy, yet too many fail to recognise themselves as brands in their own right. This lack of awareness puts them at serious risk, especially as the online nature of social media makes it easier for SARS to track income and ramp up its enforcement efforts. Whether it's cash payments or promotional gifts, undeclared income could result in penalties that not only drain earnings but also jeopardise careers.

To succeed like a brand, influencers need to act like a brand. Transparency and compliance aren't just good ethics — they're good business. For influencers who find themselves falling short of compliance, the SARS Voluntary Disclosure Programme (VDP) that was launched in 2012 offers a valuable second chance to get back on track. The VDP enables taxpayers to declare previously undeclared income and avoid severe penalties — provided they act proactively and approach SARS before an audit is initiated.

While the VDP serves as a critical lifeline for influencers who have overlooked their tax obligations, it's not a one-size-fits-all solution. To benefit from the VDP, you must act before SARS identifies non-compliance, and it is important to note that leniency isn't guaranteed after that point. To avoid this risk altogether, compliance must evolve into a lifelong habit. Tax laws are constantly changing, and staying compliant is an ongoing responsibility.

Compliance demands more than just paying taxes — it requires a solid understanding of tax obligations and navigating a complex financial environment shaped by evolving platform rules and algorithms. The demographic profile of influencers poses unique challenges here, with most of them either Gen Z or Gen Alpha. While this age bracket is incredibly tech-savvy, Gen Z or Gen Alpha often lack the business acumen and financial literacy required for sustainable, long-term success. This gap highlights the urgent need for financial education tailored to influencers, empowering them to manage their earnings responsibly and thrive in the digital economy.

Many influencers face challenges because they don't treat their activities as businesses. For instance, some use personal bank accounts to receive income, which automatically categorises them as sole traders, subjecting them to additional scrutiny. The responsibility of being tax-aware doesn't rest solely on influencers, though. Marketing agencies should also play a role in educating influencers about their contribution to the economy and their compliance responsibilities under tax laws and regulations.

Practical Tips for Influencers to Stay Tax Compliant:

Register as a Business

Treat your influencing career as a legitimate business. Use a business bank account to keep personal and professional finances separate, which also simplifies tax calculations. Sole traders often face additional scrutiny, so proper registration is crucial.

Track Every Income Source

Whether your earnings come in the form of cash, cryptocurrency, or promotional gifts, document all sources meticulously. Failing to do so could lead to undeclared income penalties.

Understand Your Tax Obligations

Work with a tax professional to understand key obligations such as VAT, income tax and provisional tax. Every influencer's tax situation is different — some rely on their influencing career as a full-time profession, while others use it as a secondary income stream alongside another job. Either way, expert advice can help you stay compliant.

File Taxes on Time

Avoid costly penalties by submitting your tax returns promptly. Late filings can erode your income and complicate future compliance efforts.

Leverage the SARS Voluntary Disclosure Programme (VDP)

If you've overlooked declaring income in the past, the SARS Voluntary Disclosure Programme (VDP) offers a chance to rectify your tax affairs before an audit begins. The programme allows you to address non-compliance issues dating as far back as 2010.

Seek Professional Guidance

The tax landscape for influencers is complex and ever-changing. Consulting a tax practitioner can save you time, reduce stress and ensure you're meeting all legal requirements while focusing on growing your brand.

For more information, visit www.vantageadvisory.co.za. You can also follow Vantage Advisory on Facebook, LinkedIn, X, or on Instagram. 

*Image courtesy of contributor