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New Zealanders have been warned that revenue earned from YouTube clips of their adorable pets or gaming activities could be taxable income.
The country’s Inland Revenue Department launched a consultation March 28, cautioning that YouTube receipts will be taxable if they are “assessable income” as defined in the Income Tax Act 2007.
Relevant receipts can include AdSense revenue from Google, commission earned by promoting another organization’s merchandise on a YouTube channel via external links, fees received for content, and sponsorship.
The advice notes that “income” isn’t defined exhaustively in the Act, but case law has identified relevant features including notions of periodicity, recurrence and regularity and “its quality in the hands of the recipient.”
The IRD advice includes gives examples including the case of Sarah, who “owns an especially cute hamster” that earned her NZ$10,000 ($6,994) in advertising revenue in just one month, before the Internet largely lost interest in clips of her pet.
Although the hamster’s fame was short-lived, Sarah’s decision to monetize the video through ads with the dominant purpose of making a profit means the advertising income would be taxable, IRD says.
Likewise Hayden, an online gamer who posts videos of himself playing “CourtCraft” and earns commission from the game developer when people click through to its online store, would be taxed on the commission income, it says.
However, amateur wildlife photographer Damian, who sells pictures taken on his annual safari holidays in Africa, won’t be taxed on the income, according to IRD.
That’s not because the animals photographed by Damian are less endearing than Sarah’s hamster.
Rather, Damian “lacks a profit-making intention” and is only selling photographs to offset some of the costs of his holiday and hobby, IRD says.
Comment on the draft advice closes May 4.
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