Taxing Content Creation

My husband watches videos of gamers playing his favourite first-person shooter computer game. My children watch other children unboxing toys and hamsters finding their way through mazes on YouTube Kids. I follow my favourite style consultant on Instagram and read her blogs. My younger cousins avidly watch the latest TikTok videos. We love watching these people having fun, so can they really be earning taxable income?

Inland Revenue is trying to clarify the tax rules for content creators, like bloggers, influencers, gamers, online reviewers, video makers and has issued an Exposure Draft with a deadline for comment by 1 June 2021. We have outlined below some examples, to outline some of the difficulties of the proposed rules, as it means that content creators may be liable for more income tax than they previously thought. If you are affected by these proposed rules, do you agree with them?

Woman typing on laptop

Is it a Hobby, a Side Hustle or a Business?

This distinction can change over time. There is a low-income exemption for ages 18 and under, so they don't pay tax if they earn less than $2,340 a year. For over 18s, the exemption is only $200 a year.

For instance, an amateur photographer sets up a Facebook page posting images of his LEGO Creator models. A toy store offers to pay him $150 for a one of his photos, to use in their LEGO in-store display. At this stage, the photography is still a hobby, the income is not regular, expenses far outweigh the income, and he is not intending to do photography as a business. He earns less than $200 so he doesn't need to declare any taxable income.

His photography and LEGO creations improve and he sets up Patreon account. Donors get access to exclusive photos which are not on his free Facebook page. He receives lots of small donations during the year, pushing his income up to $250 in a year. The $250 is related to his photography activities and more than $200, so he needs to declare it as taxable income. He can deduct his expenses though, such as new lenses, editing software, internet subscriptions.

He creates a stop motion video from his LEGO which goes viral on Tiktok. He receives commission income from toy stores for the post links, which is taxable income, even though this is still a side hustle for him.

He stops creating photo posts and video posts as he's too busy with his main work, but still is receiving income from his old photo / video content. Even though it's now passive income, it is still taxable, but he can't keep claiming business expenses because he is not actively involved.

Are Gifts of Goods and Contras Taxable?

IRD considers goods and contras to be taxable if they relate to the income-earning activity of the content creator, and can be converted into money. But if you didn't buy it, how would you decide on the taxable value?

For instance, in the LEGO photographer example, if a toy store decided to gift a LEGO set to photographer as well as paying commission, the secondhand value of the LEGO set would be used to determine a reasonable estimate of the taxable value. You could look at what similar sets are selling for in TradeMe or another online marketplace, and deduct the listing fee or commission for the sale.

If a homewares reviewer received a free espresso machine in exchange for a review, that is considered a contra. The espresso machine could be sold second-hand afterwards or kept, but the timing of the income would be receipt of the espresso machine. The value would be either what it was actually sold for, or estimated from looking at an online auction website.

In some cases there may be no resale value, such as used personal items like toothbrushes. If a gamer was required to show and consume some branded ice coffee drinks while gaming as part of a sponsorship deal, then the drinks would not be income as they cannot be sold.

What Expenses to Claim?

If you have an income-earning activity you can claim a deduction for expenses and depreciation (gradual write-down of assets) on items you use in the business. There needs to be a relationship between the expense and the income-earning activity.

A blogger may have home office costs, internet and phone, depreciation on computer, subscriptions to industry relevant material, professional fees. If the blogger has to travel to interview people or do research, then the travel costs can be claimed.

Most clothing expenses makeup and haircuts are not deductible, even though the content creator is the face of their brand and has to be well-presented. Clothing is considered private or domestic expenditure because it is used for warmth and modesty. This applies even if the clothes are worn just for a photoshoot. An exceptional circumstance may be made for a costume used in a skit. I read recently that ABBA had outrageous costumes to get around similar rules in 1970s Sweden[i]. Models can usually claim hairstyling and makeup just before a photoshoot. It appears that IRD are not willing to extend a claim for clothing, hair and makeup to influencers who model for their own social media posts and act in their own videos.


Content creators, are a relatively new form of advertisers, and IRD is seeking to provide guidance to them to ensure they know their tax obligations. In doing so, some hobbyists may quickly find themselves with taxable income sooner than they thought, and some influencers may have fewer expenses to claim. The lines between influencer, model, celebrity and actor may be blurry at best, and it may require serious debate to clarify them.

-          Serena Irving

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Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.