US RWT should only be applied to theme price and not support

Envato Authors Author Hangout
1

I want to bring this very important point to Envato team as it has affected the earnings adversely.

I am not an accountant but with what I read:

  1. US RWT is essentially royalty withholding text that applies to creative items which are Resaleable "Digital commodity"without any author/creator efforts or interventions.

  2. Support for the item is more like services and it can not be treated as commodity and hence US RWT should not be applicable to services.

I suggest Envato should only collect RWT on item price.

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2

  1. That’s correct, as far as I know.

  2. According to the announcement… “US RWHT won’t be applied on service income including Item Support extension purchases and freelance/service work you provide via Envato Studio. The portion of item support which is embedded in the Item Price will have US RWHT applied.”… there’s no withholding on support.

  3. They do only collect it on the item price. The item price being 80% of the list price on non-graphicriver items.

3

I am aware that for extended support RWT is not being applied.

Where there is clear difference between item support and item price, I see no reason why envato can not excluded RWT on support price.

The accounting rules has to be same for default support + extended support. Support is considered service in both case.

Also this is envato’s understanding that the default support is part of item price and not imposed by IRS

4

I thought they did. Are you having taxes withheld on your support part of the item price?

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Check the image below:

image
no_rwt.jpg981Ă—324 71.5 KB

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Indeed, I noticed this too.

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I second this. US RWT can only be applied on the theme price not support.

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@SpaceStockFootage can you get clarification on this from Top Management, as this can potentially save lot of money at end of the month-year.

Also this is legitimate method as envato is already using it for extended support instance

This will be really helpful for all the authors who is at the receiving end of this.

9

Tagging @collis, I would really appreciate clearer details on this one. Thank you very much

Cheers!

10

Hey guys, @collis answers this here.

So it seems they might have tried splitting the support out of the item price in order to save us some money in tax, however US might have come back and said no that’s not possible. At least they tried :slight_smile: <- total speculation. I’m not really sure the reason why “included support” was split out of the item price. Attempting to reduce our author tax seems like a pretty good reason they would do this.

11

As long as Moderators are curious about sharing speculation and own theories, even a legitimate intention from Envato’s side will start appear just as theory. Just my 2 cents.

Better wait for staff reply authors :expressionless:

2 Likes
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@collis If you are billing me with the bifurcation of item price in two parts and one being clearly marked as item support and if same invoice is provided to customer, I Do not see the reason to treat “APPLE” as an “APPLE”

It is like conveniently selling the item and enforcing the tax on total price, while expecting author to provide support as service and yet being taxed.

Who ever is the accounting consultant @envato, they are treating the services as “digital commodity” and has taken enough efforts to held authors liable for taxing.

Who is making blunders here?

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If this is the case, then they should just leave the support as an extension not mandatory support on the item. Splitting the item price is useless if it will be taxed too.

1 Like