You've poured your heart into creating something brilliant. Your creative project is ready to launch, and crowdfunding seems like the perfect way to get it off the ground. You set up your Kickstarter or Pozible campaign, watch the pledges roll in, and suddenly you're wondering: What happens when the Australian Taxation Office comes knocking?
Here's the thing most creatives don't realise until it's too late—crowdfunding income isn't always the tax-free windfall you might hope for. Whether you're a musician recording your debut album, a filmmaker producing your passion project, or an artist launching a new collection, understanding income from crowdfunding platforms isn't just important—it’s absolutely critical to keeping your finances in tune and avoiding a seriously harsh tax bill down the track.
The Australian crowdfunding market hit USD $368.0 million in 2024 and is projected to reach USD $1,321.6 million by 2033, growing at 15.26% annually. With this explosive growth, the ATO has turned up the volume on scrutiny. Let's break down everything you need to know about crowdfunding income, so you can keep playing your best financial performance without missing a beat.
Understanding income from crowdfunding platforms starts with knowing what the ATO considers "income" versus what they'll let slide as a genuine gift. Here's where it gets interesting—not all crowdfunding models are created equal in the tax office's eyes.
The ATO breaks crowdfunding into four distinct categories, each with wildly different tax implications:
Here's where understanding income from crowdfunding platforms gets real. The ATO simplifies the entire assessment down to two critical questions:
If you answer "yes" to either question, your crowdfunding income is almost certainly assessable. But what constitutes "carrying on a business" for creative professionals?
The ATO considers you're running a business if you're operating:
Here's the kicker for creatives: the ATO recognises that for film production, music, and painting, it's genuinely difficult to determine whether activities constitute business operations or hobbies. Each case gets assessed on its facts and circumstances.
Critical timing issue: If you're still in the preparatory stages and haven't actually commenced business operations, money received might not be assessable income yet. But once you've made the decision to start a business and taken action? Game on.
A profit-making scheme exists when you've launched with the intention to make a profit and entered into commercial transactions. The ATO disregards whether you're already running a business, whether the project is part of your usual activities, whether you have a clear profit pathway, or whether profit is actually achieved. If you expect to make a profit and run the project in a businesslike way, funds raised get factored into determining your taxable profit.
GST adds another layer to understanding income from crowdfunding platforms. Whether GST applies depends on your annual turnover, whether you're carrying on an enterprise, and which crowdfunding model you're using.
The GST registration threshold is AUD $75,000. Once your annual turnover exceeds this amount, you must register for GST. But here's where it varies by model:
| Crowdfunding Model | Promoter GST Liability | Intermediary GST | Funder GST Credit |
|---|---|---|---|
| Donation-Based | NO GST (no supply to funder) | YES (taxable supply of services) | NO |
| Reward-Based | YES (if making taxable supplies) | YES (taxable supply of services) | YES (if registered and creditable) |
| Equity-Based | NO (input taxed financial supply) | YES (taxable supply of services) | NO |
| Debt-Based | NO (input taxed financial supply) | YES (taxable supply of services) | NO |
For reward-based campaigns—where most creatives operate—you'll have GST liability if you're making taxable supplies and your turnover exceeds the threshold. Platform fees charged by Kickstarter (5% on successful projects) or Pozible are deductible business expenses if your income is assessable, but they're separate from your GST obligations.
The mechanics of reporting depend entirely on your campaign structure and whether you're operating as a business. For reward-based campaigns that constitute business income, you'll report the full amount received as assessable income in your tax return for the year you receive it.
Here's a common trap: income-expense timing mismatches. If you receive crowdfunding income in one tax year but incur expenses delivering rewards in the following year, you'll report income in the first year and claim deductions in the second. This timing mismatch can result in a significantly higher tax liability in the income year.
Example: You run a successful Kickstarter campaign in June 2026, receiving $50,000. You spend $35,000 producing and shipping rewards in August 2026. You'll declare the full $50,000 as assessable income in the 2025-26 financial year and deduct the $35,000 in 2026-27—unless your production and shipping happens before June 30, 2026.
When crowdfunding income is classified as assessable, you can claim deductions for:
The ATO requires you to keep comprehensive records for five years from when records were prepared or transactions completed, whichever is later. This includes:
Understanding income from crowdfunding platforms isn't just about creators—backers have tax considerations too.
For donation-based contributions, backers cannot claim tax deductions unless they're donating to a Deductible Gift Recipient (DGR) organisation. The ATO explicitly warns that many crowdfunding websites do not have DGR status, meaning donations aren't tax-deductible even though they feel charitable.
For reward-based contributions, backers are treated as consumers purchasing goods or services. Contributions aren't deductible—they're simply purchases.
For equity contributors, dividends received are assessable income, and share disposal may trigger Capital Gains Tax obligations. Interest on money borrowed for crowdfunding investment is deductible if the interest expense was incurred for an income-producing purpose.
For debt contributors (peer-to-peer lending), interest income received is assessable income that must be declared in tax returns. If a loan defaults, they may qualify for capital loss deductions.
The ATO monitors crowdfunding activity more closely than most creatives realise. Common mistakes that attract scrutiny include:
The ATO specifically monitors campaigns raising significant amounts, ongoing use of crowdfunding for repeated projects (indicating business operations), insufficient documentation, failure to declare platform-reported income, and GST non-compliance.
For creative professionals, there's an additional complexity: the hobby versus business distinction. Since FY24, equity crowdfunding saw the Food and Beverage sector raise $19.7 million across 29 deals, with an average deal size of $661,000. The approximately 130,000 Australians who've participated in CSF offers face varying tax treatments depending on their specific circumstances.
Before launching any crowdfunding campaign, determine which model you're using (donation, reward, equity, or debt-based) and assess whether your activity constitutes a business or hobby. Calculate your accurate funding target including platform fees (Kickstarter charges 5% on successful projects), reward production and fulfilment costs, tax obligations, and marketing costs.
Plan your income and expense timing to align with the tax year where possible. If you're launching a campaign in June, consider whether you can complete reward fulfilment before June 30 to avoid timing mismatches. Establish record-keeping systems from day one and determine your GST obligations—register if your turnover will exceed $75,000.
During your campaign, maintain detailed records of all contributions received with dates, contributor information, promised rewards, and platform fees. Track all campaign-related expenses and monitor GST obligations if applicable.
Post-campaign, document all income received (including platform fees deducted), calculate your net income or loss, determine tax treatment, prepare documentation for your tax return, claim deductions for related expenses, and complete GST obligations if registered.
Understanding income from crowdfunding platforms can feel like learning a new instrument—complex, nuanced, and requiring expert guidance to master. Consult with tax professionals if you're raising significant amounts (AUD $20,000+), unclear whether your activity is business or hobby, planning to use crowdfunding repeatedly, operating as a business structure (company, partnership, trust), expecting GST obligations, or concerned about ATO compliance.
The Australian crowdfunding market's projected growth to USD $1,321.6 million by 2033 means more creative professionals will navigate these tax waters. With approximately 39.6% success rates for reward-based campaigns and average successful campaigns raising $8,150, getting your tax treatment right from the start protects your hard-earned funds and keeps you focused on what matters—creating brilliant work.
Money from reward-based platforms like Kickstarter or Pozible is generally assessable income if you're carrying on a business or involved in a profit-making scheme. When you provide goods, services, or rewards to backers, the ATO treats this as business income. Donation-based crowdfunding may not be taxable if funds are genuine gifts with no rewards provided, but this is rare for creative projects.
Yes, if you're carrying on an enterprise and your annual turnover (including crowdfunding income) exceeds $75,000, you must register for GST. For reward-based campaigns where you're providing taxable supplies to backers, you'll have GST liability and must account for GST in your Business Activity Statements. Equity-based and debt-based crowdfunding involve input taxed financial supplies and generally don't attract GST.
Platform fees charged by crowdfunding intermediaries (such as Kickstarter's 5% fee on successful projects) are deductible business expenses if your crowdfunding income is assessable. These fees must be directly related to earning your assessable income, and you'll need appropriate substantiation records showing the fees paid and their connection to your income-generating activity.
The ATO requires you to keep comprehensive records for five years. These records should include the amount and date of funds received, a description and purpose of the campaign, details of goods or services provided to contributors, evidence of business registration and GST status, as well as invoices, receipts, and all correspondence with contributors. All records must be maintained in English.
The ATO assesses whether you're carrying on a business by looking at factors such as commercial intent, businesslike operations (including business plans, marketing, and proper record-keeping), and the regularity of your activities. For creative projects, the distinction can be nuanced. If your activities are deemed a business, your income is assessable and expenses deductible; if considered a hobby, income may not be assessable but you also cannot claim deductions for related expenses.
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