Influencers must stay on the right side of the tax rules. (File photo) Photo: Supplied/123rf
Emily Holdaway, or Officially Em, as she is known to her thousands of online followers, says she is running a constant type of mental tally when it comes to what is a "business" expense and what is just the cost of normal life.
While Holdaway had more recently moved her focus to offering social media workshops and building an online community, she was previously best known for her blog Raising Ziggy and related work as a social media influencer.
Some of the admin questions she had to address as part of her business highlight the complexities the influencing industry navigates when it comes to staying on the right side of the tax rules.
Generally, self-employed people could claim their business costs in their tax returns, which reduced the amount of income on which they must pay tax. But people usually cannot claim deductions for personal expenses.
When your income comes from sharing your life, that can be a problem.
Holdaway said she claimed all the business-related expenses any other type of business would. "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.
"But for things like when I'm in my car and I'm sharing on my [social media] stories, I'm thinking is this work or is this not?"
She said she did not claim food costs or clothing, whereas other social media influencers might.
"I don't claim my clothes but I also shop at secondhand shops. If I'm running an event or if I'm somewhere that's because of work or I'm going to something I'm going to create content with, then yes.
"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."
She said it was complicated for self-employed people, and particularly influencers.
"Is work the influencing or what you're getting paid to influence? Is it work when you're showing up because you've got a campaign for someone… or it just the get ready with me, hey I'm having my coffee let's go for a walk. You could argue both ways, I think. Does my coffee become a work expense if I show that on my story every morning?"
Hnry chief executive James Fuller said, based on the 2023 census, influencers in New Zealand were paying up to $50 million a year in tax but that figure was fluid and growing.
Hnry co-founder James Fuller. (File photo) Photo: Supplied/Hnry
"It's a really interesting development over the last 10 to 15 years in the economy that we have a whole group on the sole trader spectrum who are earning income in content creation and as influencers.
"That can stretch from everything from micro influencers who have a couple of thousand followers all the way through to people who have a couple of hundred thousand.
"I think often when people say 'influencer' they imagine someone with millions and millions of followers. But what we are seeing is actually the rise of content creators who are able to generate an audience, bring in brand deals, partnerships, sponsorships and then managing revenue effectively as a sole trader."
He said people needed to be aware that if they were generating revenue, even if it was just from talking about life, that would come with the same obligations as any other business.
"As such there are things to consider such as the taxes, but also the expenses side of things."
In the 2023 Census, 2646 people selected "multimedia designer" or "multimedia specialist" from the available occupation options, 228 of whom were self-employed.
"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."
Expenses that influencers would often be able to claim would include home office costs, travel expenses, music, the cost of giveaways or the games used by gaming creators.
Inland Revenue said people could claim expenses even in years where they spent more than they earned but there needed to be an intention to make a profit.
"If you monetise content and receive regular amounts from subscribers or platforms, then the amounts are likely income and taxable," the department said.
Deloitte tax partner Robyn Walker said small scale social media use could sometimes be considered a hobby if there was not a clear intention of making a profit or there was not a lot of activity happening.
But there would always be a level at which it had to be treated as a business.
She said expenses claimed would need to have a sufficiently direct connection to the income-earning activity.
"The other thing to be aware of is that if you are buying assets and then you stop doing content creation that might have implications. If you bought a phone or a camera or a computer and you claim that deduction - normally as depreciation depending on the cost of the asset, if you stop doing then you will have to make tax adjustments to reverse out or effectively sell the asset back to yourself."
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