Musicians, influencers and celebrities are set to start paying tax on income made through endorsements, advertising, and brand sponsorship due to a new change in tax rules set to take effect in July 2019. The “Instagram tax” was first proposed in May and would see high-profile people pay tax on money earned from their fame or image through their annual assessable income.

According to AFR “the new rules would cover anything that can be attributable to a person’s reputation or appearance – including their name, image, likeness, identity, reputation and signature, irrespective of their occupation or how they became famous.” The changes have been described as offering an “unquantifiable gain” to the federal budget.

The new rules will hit Australian musicians, sportspeople, and even high profile Instagram influencers making money through advertising and sponsorship on Instagram.

Income made overseas may not be subject to the new tax rules, however AFR reports “high-profile people with licensing arrangements extending beyond the end of the current financial year could need to unwind, change or renegotiate existing agreements.” Treasury discussions also said arrangements made by many people may need to renegotiate payment agreements.

There is evidence that, currently, individuals are splitting, or apportioning, lump sum payments to shift more income outside of their personal assessable income,” noted the documents. “Income splitting arrangements can be central to contract negotiations with high-profile individuals.”

Several other governments around the world have made changes to tax laws in recent years to combat the growing income celebrities make through endorsements and deals on social media platforms. In South Africa money made through someone’s image and fame is taxed through the individual.

Discussions and consultations on these plans will finish on January 31 2019.