The rise of social media has created a new economic landscape, and with it, a complex set of tax obligations for content creators. From micro-influencers with a few thousand followers to those with hundreds of thousands, individuals earning income through platforms like Instagram, TikTok, and YouTube are navigating the same tax rules as any other self-employed business owner. But determining what constitutes a legitimate business expense – and what doesn’t – can be a significant challenge when your “office” is also your life.
Understanding the tax implications of influencer income is becoming increasingly important, not just for the creators themselves, but also for tax authorities. Recent data suggests a substantial amount of revenue is generated within this sector. According to figures based on the 2023 census, influencers in New Zealand alone are collectively paying up to $50 million in tax annually, a figure that is expected to grow as the industry expands as reported by RNZ.
The Blurring Lines of Business and Personal Expenses
Emily Holdaway, known online as Officially Em, highlights the daily accounting struggle faced by many influencers. Holdaway, who transitioned from blogging and influencing to offering social media workshops, explained she’s constantly evaluating whether an expenditure is a business cost or simply a part of everyday life. “My computer, my phone, and then we have a percentage of our living expenses that we’re allowed to claim based on the floor area ratio of our office space compared to our house space,” she said, outlining her approach to claiming legitimate business expenses.
However, the line becomes blurred when it comes to activities that blend personal life with content creation. Holdaway doesn’t claim costs for food or clothing, but acknowledges others may. She does, however, claim expenses related to events or content creation opportunities. “If I’m going out and getting lunch and sharing that I went to McDonalds I’m not going to claim that because it’s still part of your everyday living. But if I have an event where I’m getting together with a whole heap of people within the community then it’s a business expense.” The core question, she notes, is whether the activity is directly tied to generating income.
What Expenses Can Influencers Claim?
Generally, self-employed individuals can deduct legitimate business costs from their taxable income. According to experts, common deductible expenses for influencers include home office costs, travel related to work, music licensing fees, and the cost of giveaways. Inland Revenue confirms that expenses can be claimed even if they exceed income, provided there’s a clear intention to generate a profit.
Hnry chief executive James Fuller emphasized that generating revenue, even from seemingly casual content, triggers tax obligations. “It can be quite tricky to work out, you know, actually is this my life? Am I being paid for being in business or am I being paid for being on social media? But, you know, in the eyes of IRD, it’s very clear that if you’re if you’re generating revenue from it, then it is a taxable activity and therefore you are in business and you have all of the opportunities that come from being in business when it comes to expenses, tax management, those sorts of things.”
The Importance of Intent and Record-Keeping
Deloitte tax partner Robyn Walker cautions that small-scale social media activity may be considered a hobby if there’s no clear profit motive. However, she notes that a threshold exists where activity must be treated as a business. Crucially, expenses claimed must have a direct connection to income-earning activities. She warns about the implications of ceasing content creation after claiming deductions for assets like phones or cameras, potentially requiring tax adjustments.
The Inland Revenue department clarifies that monetized content generating regular income from subscribers or platforms is considered taxable. This underscores the importance of meticulous record-keeping and a clear understanding of tax obligations for anyone earning income through content creation.
As the influencer landscape continues to evolve, staying informed about tax regulations is crucial for both creators and the authorities. The ongoing growth of this sector suggests that the conversation around influencer taxation will only become more prominent in the years to come.
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