Auckland, New Zealand – The burgeoning industry of social media influencing is facing increased scrutiny over tax obligations, with practitioners navigating a complex landscape of business expenses and personal costs. As the sector grows, authorities are paying closer attention to ensuring compliance with tax regulations, a challenge compounded by the often-blurred lines between professional and personal life for many influencers.
Emily Holdaway, known online as @officiallyem, articulated the constant mental calculation many influencers undertake. “I’m 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,” she told RNZ News. Holdaway, who has transitioned to offering social media workshops and building an online community after gaining prominence with her blog Raising Ziggy, highlights the administrative complexities inherent in the profession.
The core principle guiding tax deductions for self-employed individuals is the ability to claim legitimate business costs, thereby reducing taxable income. However, differentiating between business expenses and personal expenditures becomes particularly difficult when an influencer’s income is derived from sharing aspects of their daily life. Holdaway explained her approach to claiming expenses, stating, “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.”
The ambiguity extends to seemingly straightforward scenarios. Holdaway questioned whether activities like sharing content while driving should be considered work-related expenses. “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 asked. She clarified her practice of not claiming food costs or clothing, although acknowledged that some influencers may do so, particularly when attending events or creating sponsored content. “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.”
The scale of the influencer economy in New Zealand is significant and growing. James Fuller, chief executive of Hnry, a company assisting self-employed individuals with tax compliance, estimates that influencers in New Zealand are collectively paying up to $50 million annually in taxes, a figure he describes as “fluid and growing.” He noted the diversity within the sector, ranging from “micro influencers” with a few thousand followers to those with hundreds of thousands.
Fuller emphasized that even those generating income through lifestyle content are subject to the same tax obligations as any other business. “As such there are things to consider such as the taxes, but also the expenses side of things,” he stated. The 2023 New Zealand Census recorded 2646 people identifying as “multimedia designers” or “multimedia specialists,” with 228 operating as self-employed.
The key distinction, according to Fuller, lies in the intention to generate profit. “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 We see 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.”
Common deductible expenses for influencers include home office costs, travel related to work, music licensing fees, and the cost of giveaways. Inland Revenue New Zealand (IRD) allows individuals to claim expenses even in years where expenditures exceed income, provided there is a demonstrable intention to generate profit. The IRD stated that monetized content generating regular income from subscribers or platforms is considered taxable income.
Deloitte tax partner Robyn Walker cautioned that small-scale social media activity might be considered a hobby if there is no clear profit motive or limited activity. However, she stressed that a threshold exists beyond which activity must be treated as a business. Walker also highlighted the potential tax implications of claiming deductions for assets, such as phones or cameras, and subsequently ceasing content creation. “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.”
The evolving regulatory landscape underscores the need for influencers to maintain meticulous records and seek professional advice to ensure compliance with tax laws. The complexities inherent in defining business expenses within the context of a lifestyle-focused income stream are likely to remain a key challenge for both influencers and tax authorities alike.
