Your doorbell rings. It’s another box: skincare, a hoodie, a pair of headphones, a voucher for a weekend away. Free stuff is a lovely perk of growing an audience. It’s also income in Inland Revenue’s eyes, more often than most creators realise.
Here’s the plain-English version of how IRD treats gifted products, fan money and brand deals, what you can claim back, and how to stop a pile of PR boxes turning into a tax bill you didn’t see coming.
Do gifted products count as income?
They do if they’re tied to your content. Inland Revenue says that when you receive products, services or experiences because of your creator work, their value goes in your tax return. It also says plainly that “not all products or benefits you’re given will be income,” and gives four things to weigh up (Inland Revenue: income from products or benefits):
- Regularity. One random sample a year looks different from a box a week.
- Relationship. Is the sender a brand or agency, or your aunt?
- Purpose. Was it sent so you’d post about it?
- Convertibility. Could you sell it?
IRD’s own example uses fashion. Someone who posts outfits in their spare time and gets the odd sample is unlikely to have income. An established fashion creator who promotes brands and regularly accepts gifted products does.
If you’ve got a media kit, an agent, a rate card or an inbox full of “we’d love to send you something”, assume you’re in the second group.
The rule that catches everyone: it’s taxed when you say yes
This is the bit that hurts. IRD treats an item as income when you receive it, not when you sell it, use it or post about it. So:
- You can’t avoid tax by never selling the item.
- You can’t avoid tax by giving it to a mate, running a giveaway or donating it to charity. IRD says that’s still income, because you accepted it and then chose to give it away.
- If you later sell a gifted item, the sale price is income too. IRD lets you deduct the value you already counted, so you’re not taxed twice (Inland Revenue: payments, products and services).
IRD’s advice is refreshingly blunt: “If you do not want to be taxed, do not accept the item.” A polite “thanks, but I only take paid work” is a perfectly professional reply, and it’s tax-free.
What about fan money, tips and memberships?
Same thinking. Money from YouTube, Twitch, Patreon or similar platforms is generally income when it’s linked to your content. IRD says “the labels ‘gift’ or ‘donation’ do not determine whether a payment is income” (Inland Revenue: payments and donations).
The test it suggests is simple: would you have got this money if you didn’t make the content? If no, it’s income. IRD’s examples include a creator whose supporters pay for early access to videos (income) and a grandmother’s one-off cash present to her grandchild (not income). If IRD ever asks, it’s up to you to show a payment had nothing to do with your channel, so keep notes on genuine personal gifts.
Small, irregular amounts are less likely to count. But once tips arrive every month and you’re putting effort into earning them, you’re in business.
How do you put a value on a free hoodie?
IRD wants “the monetary value” of items in your return, but it doesn’t spell out one method. Most creators and their accountants land on a sensible, consistent estimate. Here’s a simple system:
- Log it the day it arrives. Brand, item, date, what they asked for in return.
- Snap a photo of the item and the packing slip or email.
- Record a realistic value, for example what the same thing sells for second-hand on Trade Me, or the retail price where the item has no second-hand market.
- Note what happened next: kept, sold (and for how much), or returned.
- Total it every month so it’s ready for your IR3 or company return.
A shared spreadsheet or a tag in your accounting software does the job. Creators who track as they go spend minutes at tax time. Creators who reconstruct a year of PR boxes from Instagram stories spend a weekend and still guess.
A worked example: Mia’s first proper creator year
This is an illustrative example, not a real person.
Mia makes home-styling content from her Hamilton flat. In her first year as a serious creator she:
- earns $28,000 from paid brand deals, invoiced from her sole trader business;
- gets $3,500 in platform payouts and memberships;
- accepts about 60 PR packages: candles, bedding, a lamp, a couch cover, a weekend stay in Taupō. She records them at a combined value of $6,000.
Her income for tax isn’t $31,500. It’s closer to $37,500, because the gifted products count. She can then deduct her real business costs: a share of her phone and internet, editing software, a new camera and lights (depreciated, with anything $1,000 or under claimable in full as a low-value asset), and a portion of home costs for the room she shoots in.
She’s under $60,000, so GST registration isn’t compulsory yet. But if next year’s deals double and the freebies keep coming, she could cross the line, and IRD’s test looks both backwards and forwards. Her residual income tax may also tip her into provisional tax the year after. Neither is a disaster if she’s put money aside. Both are nasty if she hasn’t.
What can creators actually claim?
IRD’s list for creators with an income-earning content activity includes (Inland Revenue: claiming expenses):
- home office costs like rates, insurance, power and mortgage interest or rent, for the part of your home used for content;
- phone and internet, apportioned for business use;
- software subscriptions, music licensing and editing tools;
- professional help such as accountants, editors and designers;
- props and materials used up in making content;
- depreciation on gear like cameras, lighting, microphones and computers.
On gear, IRD says “the low-value threshold is $1,000”. Assets at or under that can be claimed in full in the year you buy them; pricier kit is depreciated over its life (Inland Revenue: depreciation for creators). If you also use it for personal stuff, only the business share counts.
What you usually can’t claim: outfits, everyday make-up and haircuts. IRD’s view is that clothing is private “even if a high standard of dress is required”. Yes, even if you’re the face of the brand. Budget for it from after-tax income.
GST, ACC and provisional tax: the next level up
Once a creator business grows, three things show up:
GST. Registration becomes compulsory at $60,000 of taxable turnover in a rolling 12 months, past or expected. Gifted products received for promotion can count toward that, so don’t just add up your invoices. Our GST threshold guide explains the test and filing options. Brand work for overseas companies can be treated differently, so check with your accountant before you assume it’s in or out.
ACC. IRD notes there’s now a business industry classification code specifically for digital content creators, so your ACC levies are set for what you actually do. Pick it when you file.
Provisional tax. When your residual income tax goes over $5,000, you’ll usually pay provisional tax the following year, and the first time can feel like paying two years at once. See provisional tax in your first years.
Not sure whether to run all this as a sole trader or a company? Our sole trader vs company guide breaks it down for small businesses like yours.
Setting aside cash for tax you didn’t get paid in cash
Here’s the cheeky problem with freebies: you owe tax in dollars on income that arrived as candles. A creator with $6,000 of gifted products pays tax on that $6,000 out of their cash income.
A few habits keep it under control:
- Move a set share of every brand deal payment into a separate tax account the day it lands. Your accountant can suggest the right share for your bracket.
- Add a top-up for freebies when you do your monthly gift log.
- Say no more often. Every box you accept is a tiny tax bill. Only take products you’d genuinely use or feature.
- Charge properly. If a brand wants a post, a story set and usage rights, that’s a paid job, not a “collab” paid in product.
If a tax bill or a big gear upgrade lands before the brand invoices are paid, a quick enquiry can show you whether funding fits your situation before it becomes a scramble.
Creator income and lenders: what helps
Lenders don’t care how many followers you have. They care about money that shows up in a bank account, regularly. When creators ask us about funding, the ones who get the cleanest answers usually have:
- a separate business bank account, with brand payments and platform payouts going in;
- around six months or more of trading history in that account;
- invoices for brand work, rather than a mix of cash, product and DMs;
- tax filed and up to date, or a clear plan with IRD if it isn’t.
Gifted products don’t help your borrowing at all. They don’t show up in your statements, but they do add to your tax. That’s one more reason to turn product-only deals into paid ones. Read what lenders read in your bank statements to see how your account looks from the other side of the desk.
Ready to fund the next level of your channel?
Getting the tax right is what separates a creator with a hobby from a creator with a business. And businesses need funding sometimes: a camera body before a big campaign, a studio, an editor on retainer, or cash to cover a tax bill while brands sit on 60-day terms.
That’s what we do. Our loans for agencies, studios and creators are built around income that arrives in lumps rather than fortnightly pay. If you’re newer, or need more than your statements support, property-secured options from $20,000 to $1m may work instead. Equipment and tech funding covers the kit side.
Here’s how it works:
- About 60 seconds to tell us what you need, with no credit check when you first enquire.
- We don’t spray your details across a pile of lenders. No surprise calls from people you’ve never heard of.
- A real person looks at your creator business, brand deals, payouts and all, and calls you to talk it through.
- Fill the form in accurately, with real turnover and how long you’ve been trading, so we can match the right option first time.