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TAX •  26 JULY 2023 • 6 MIN READ

A complete tax guide for content creators

A content creator standing infront of her phone on a tripod

A new wave of ‘content creators’ has emerged from platforms such as YouTube, TikTok, Instagram and Onlyfans, earning money from the fans they attract with their content. Naturally, the IRD has not turned a blind eye to this booming industry! 

In order to avoid the IRD’s fines and penalties, it’s important to understand certain tax obligations. Do content creators pay taxes just like every worker in New Zealand? In this guide, we’re going to cover everything you need to know about tax as a content creator.

What are my tax responsibilities as a content creator?

Business vs hobby

Before we go further on tax responsibilities for content creators, we need to distinguish between a business and a hobby. This is because how you treat your activities will make a big difference in terms of whether you’ll be taxed and what obligations you must meet.

Let’s put this simply - expenses from your hobby are not tax deductible. However, if you are running a business (e.g. working as a YouTuber full-time), your income must be declared in your tax return. Your ‘income’ could be money you received from partnerships, appearance fees, and more. 

The distinction between carrying out a business and having a hobby is determined by several factors: 

  • Regularity of your transactions
  • Whether or not you’re promoting yourself as a business (e.g. have a brand name)
  • Whether you engage in marketing activities
  • Whether you intend to develop a business and make a profit or have the capacity to generate a profit over time
  • The size, scale and permanence of your activities
  • Whether you operate in a business-like manner

Do I need to pay taxes if it’s my side hustle?

A lot of people have started creating content on various platforms to generate extra income. You need to pay taxes to the IRD if your ‘side hustle’ is determined as a business. In other words, you must declare all your income on your tax return and pay the right amount of tax on it. You may also be eligible to claim back business expenses. 

Paying taxes - what will be taxed?

The IRD has made it clear that money received for advertising, appearance fees, or cryptocurrency will be taxed. A free holiday trip from a travel agency as a travel blogger or a free handbag a company send you to promote may sound enticing, but you’ll need to declare the market value of these ‘free products’ to the IRD and pay tax on it. In reality, this may create a cashflow problem when you pay tax to the IRD for ‘free products’.

For content creators, the timing you receive your income is also important. According to tax regulations, income is deemed to have been earned "as soon as it is applied or dealt with in any way on your behalf, or as you direct." As an example for OnlyFans content creators, income is considered earned when it is credited to their OnlyFans account, and not when it is transferred to their personal or business account. Keeping income in their platform account will not prevent them from owing taxes to the IRD.

Read more on IRD's website: is your content creating you income?

Do I need to register for GST?

The GST registration threshold in New Zealand is $60,000. If your annual income is more than $60,000, you’ll need to become GST registered. This works the same for content creators. 

For example, a Youtuber in the 2022/23 financial year will need to file and pay GST (15%) on their income as soon as they cross the threshold. However, if their content is viewed by foreign resident consumers, their income will be considered zero rated (in other words, 0% GST). This means they won’t need to pay GST to the IRD (but will still need to register if the $60,000 threshold has been crossed).

If you’re unsure whether you need to pay GST, seek advice from an accountant (such as Beany) who can help you understand your tax obligations.

What expenses can I claim back?

To claim expenses, you need to have a business rather than a hobby - this means regularly making money from your content as a content creator. One thing to note is that you can only claim a deduction for certain expenses that are directly related to income-generating activities. This may include:

  • Office equipment and furniture such as computers, desks, desk chairs, microphones, and video production equipment
  • Ongoing operational expenses such as internet, phone bills, accounting costs, and electricity if you’re running a business from a home office (read more on home office expenses)
  • Advertising costs: reserving a domain name, Google & Meta ads

However, you can’t normally claim expenses that are ‘private’ in nature. The IRD considers these ‘every day’ expenses as personal, rather than business expenses. To find out more about what you can claim, have a chat with one of our team members. 

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How to file my tax return?

You can file your income tax return yourself, however, hiring an accountant can be a wise idea. An experienced accountant knows the latest tax rules, helps you understand the nature of income you earned, minimise tax responsibilities, and lodges your tax return.

What else do I need to know?

Keep records 

Keeping good records is the number one tip from an accountant. Records to keep include tax invoices, bank statements, receipts, and contracts, this way, you’ll have the necessary documents when you need them. In New Zealand, the IRD requires you to keep records for at least 7 years in case of an audit.

Seek professional advice 

As a content creator, hiring an accountant might not be a priority. However, an experienced accountant comes in handy when dealing with your accounting and tax needs such as staying compliant, tax preparation, tax filing, and minimising your tax liabilities. So you can focus on what you do best - creating content that rocks!

How Beany can help 

We understand accounting and tax can be overwhelming - and we are here to take the weight off your shoulders. Beany's certified accountants and friendly team can help you manage your accounting and tax needs. We carefully interpret and apply tax rules to enable you to stay compliant and pay the least amount of tax legally possible.​

Our expertise comes without the jargon and is designed to help you save both time and money. To find out more about how we can help, book a call with one of our team members or get started for free today. 

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