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I was audited by the tax man quite a few years ago now.
Learning that I earned most of my revenues from my online presence on YouTube, the taxman wanted to know if I ever received freebies and I admitted that yes, this was the case.
I was told that that free stuff would be considered "income" and I would be required to pay tax on the basis of its value. If a company sent me a $100 product to review then that would be considered an additional $100 of income and taxed accordingly.
Naturally I objected to this assertion and I think my comment was something along the lines of "How can it be income? I can't go down to the local dairy and buy milk or eggs using a toy foam plane as payment".
"Ah, but you could sell it and then that money could be used to buy stuff, hence it is income" was pretty much the reply.
"Who wants to buy a second-hand, battered, broken toy plane?" I queried.
The discussion went back and forth for a while, until what I felt was a reasonable agreement was reached.
If I don't sell any of this stuff then it can hardly be considered income can it?
This is why I never sell anything that has been provided to me free of charge for review purposes by a company or individual. In fact, I have mountains of stuff that has been reviewed and then simply packed away. Most of that stuff is now worthless, simply because the technology involved ages so very quickly.
Well it seems that the IRD is now targeting other "social media influencers" and it wants to make sure they're paying their fair share of tax on any "benefits" and non-cash incomes they're scoring as a result of "free stuff" they might receive.
This Stuff story explains the situation.
It seems that they've woken up to the fact that some folk are scoring quite a lot of gear for free and I guess many of those folk are flogging that stuff off for some coin. The IRD's perspective seems to have changed a little since my discussions with them and now, according to the Stuff item:
"You’re responsible for assessing the likely re-sale value of the items you receive and paying tax on that amount – and that’s even though you haven’t actually sold the items and received that amount in cash"
Well here's my deal for the IRD. You're welcome to come around to my workshop and take your pick of the free stuff that's all boxed up here. Yes, I'm more than happy to pay my fair share of tax on income but it will be paid in kind. If you say this stuff is the equivalent of cash then just come and take your cut, I'm sure you'll find something to delight you within the boxes of wires, components, broken toy planes and other stuff that has accumulated here over the years.
If those items are *not* considered a suitable form of payment for what might be owed to the IRD then why are you suggesting that *I* consider them a form of payment?
Also, I do not accept freebies for promoting someone's products. Just check out my review channel and you will see that indeed, a fairly high percentage of the products I review get a thumbs-down review so there is a negative promotional value to these items.
Of course my social media activities are somewhat different to those of your average "influencer". Most people making a living out of their online "influencer" activities tend to be little more than shills. They'll gladly accept whatever "free stuff" is offered to them and frequently they'll also accept payment for "positive" reviews. They are indeed acting as sales agents for the products and are compensated accordingly.
That's not how I work.
I do not use affiliate links or accept commissions. I do not accept payment for reviews, nor do I accept any kind of editorial direction or input. My reviews are 100 percent objective, unswayed by commercial imperatives.
For that reason, any "freebies" I get are solely for the purpose of evaluation and performing the review, there is no financial benefit to me arising from the sale of those items and I do not sell them on to realise any potential additional value they may represent.
Indeed, if I had to consider the review samples I receive as income, I would simply stop doing what I'm doing because I could not afford to buy *everything* I review. As a result, I would start drawing my taxpayer-funded supperannuation, the country would lose the export dollars I earn every year and I would no longer be paying the $12K or so of income tax that I currently contribute to the nation's coffers every year.
Sadly, bureaucrats don't always take a hollistic view of things so they may decide to change their mind on what I'm doing -- only time will tell I guess.
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