In an age of smartphones and endless social apps, it’s no wonder our financial decisions are being influenced by big social media stars with even bigger followings. From your Instagram feed to TikTok’s endless scroll, these so-called “finfluencers” are everywhere – speaking with confidence and sharing catchy “tax hacks,” money tips, and product recommendations.
But before you jump on the next viral deduction strategy or investment idea, it pays to pause and think. What seems like a clever saving hack, could end up costing you more than you bargained for.
The Problem With “Finfluencers”
Many finfluencers make money by promoting financial products and services on behalf of companies, which means their priorities are clicks, engagement, and commissions, not necessarily your financial wellbeing. Unlike licensed professionals, they often aren’t qualified to provide tax or financial advice, no matter how convincing their posts may sound.
Worryingly, the ATO have been seeing a rise in questionable or outright false claims, including:
- Claiming pets as work-related guard dogs
- Writing off luxury handbags as laptop bags
- Deducting fuel costs without any records
- Trying to claim swimwear as work uniforms
While some of these suggestions might sound plausible, taking advice from unqualified sources could leave you with much more than a headache.
The ATO’s sophisticated data-matching resources designed to detect inflated or suspicious claims. With the rise of misleading claims, exaggerated deductions and outright misinformation, relying on questionable “advice” exposes you to potential audit, penalties, fines or worst case scenario – prosecution.
ASIC Crack Down on “Finfluencing”
In 2022, ASIC published guidance outlining how the law applies to social media influencers who discuss financial products and services. Under the Corporations Act 2001 (the Act), licensing provisions apply to persons who provide financial product advice or arrange for a person to deal in a financial product when carrying on a financial services business. Carrying on an unlicensed financial services business without the proper authorisation is an offence.
Breaking these rules can carry serious penalties, including:
- Up to five years inprisonment for individuals
- Financial penalties for corporations into the millions.
Even where an influencer is not required to hold a financial services licence, misleading or deceptive conduct in relation to financial products or services is still prohibited.
The Impact of “Finfluencers” on Young Australians
A survey published by ASIC in 2021, Young People and Money, revealed that:
- 33% of Australians aged 18–21 follow at least one financial influencer
- 64% have changed at least one financial behaviour based on influencer content
The response to these surveys has provided new insight into how young Australians learn about and feel towards their finances. It’s clear that social media has become a powerful force in how young Australians engage with their money.
“The way investors access information is changing. It is crucial that influencers who discuss financial products and services online comply with the financial services laws. If they don’t, they risk substantial penalties and put investors at risk.” – Cathie Armour, ASIC Commissioner
Stay Vigilant & Tax Smart
So, how can you protect yourself from bad advice and stay on the right side of the ATO?
ALWAYS REMEMBER: If it sounds too good to be true, it probably is – Treat “hacks” and shortcuts with caution until you verify them, especially when they pertain to regulatory financial bodies such as the ATO and ASIC. Dodgy tax tips from social media simply aren’t worth putting you or your business at risk.
Rely on trusted sources – To find out more about what is and isn’t deductible, head to the Official ATO Website.
Know your obligations – To learn more about the regulations surrounding financial advice on social media, visit the Official ASIC Website.
And if you’re still unsure, give us a call. At BISCosgrove, we help you stay compliant, no filters or hashtags! Just informed, trusted and compliant advice.
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The material and contents provided in this publication are general and informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.