Products for a promotion
A parenting creator agrees to promote a baby products company’s car seat to her subscribers, and receives a car seat and a pram.
- Car seat, retail cost$150
- Pram, retail cost$2,000
- Included as income$2,150
Guide 2 of 5 · All three lanes
Gifts and free products: when the ATO counts them as income
For a creator in business, the ATO says free or gifted products, services and experiences received in exchange for promotion will generally have tax consequences even when no cash is paid, and their market value is included as income. Outside a business, an earning activity generally declares non-cash amounts too, while for a genuine hobby the ATO says amounts are generally not assessable.
General information about the ATO’s published guidance, not tax advice, and never a view on one person’s situation. The official place to check is the Australian Taxation Office.
The ATO’s rule, in its words
“If you receive goods, services, tips, gratuities, or other benefits, as full or part payment for goods or services you provide, their market value is included as income in your tax return.”
ATO, What to include in your business’s assessable income
The same page lists the kinds of goods or services a business may receive this way:
- clothes, jewellery and accessories
- crypto assets, including cryptocurrency and NFTs
- flights and accommodation
- gaming products
- makeup and skin care
- other benefits given in place of money
- products or services from another organisation
The creator guide says the same from the other side. When a creator is carrying on a business, the income to declare includes “gifts/promotion of product (market value)”, alongside cash, ad revenue and brand deals, and non-cash benefits such as products or services go on the tax return as income.
Payment in kind is still payment
The ATO calls this a barter transaction: goods, services or other benefits received in return for what a business provides. Its page on whether you are in business makes the same point about profit itself, which “can be in money, but it can also be made through other means, like being paid with goods or services (such as a barter deal).”
Commissions work the same way. The ATO says commissions, gratuities and similar amounts received as part of business activities are included “even if they are received in the form of goods, services, assets or other benefits rather than cash.”
How the ATO puts a value on it
A gifted product arrives without a price, so the ATO needs a way to value it. Its page says that in most cases it “will accept as a market value the cash price that the taxpayer would normally have charged a stranger for the services or for the sale of the goods or property.”
In its product examples, the value used is the retail price. Where the creator also pays something, a special rule applies: the market value of what was received, less the amount the creator gave. The ATO says this can happen when goods or services are bought at a discount as part of an agreement.
Three worked examples from the ATO
A product bought at cost, for a review
The same company offers her a cot from its premium range at cost if she reviews it and shares the review through her channels. She pays $1,000 and posts the review.
- Normal retail price on the company’s website$3,100
- Less the amount she paid−$1,000
- Included as business income$2,100
A trip, with no cash at all
A lifestyle creator in her third year is invited by a resort to make promotional content. In exchange for agreed deliverables she receives return business class flights, accommodation, and meals and experiences, but no cash. The ATO says they are generally treated as non-cash business income.
- Flights, as valued in the example$8,000
- Accommodation and other benefits$5,000
- Generally included as assessable income$13,000
Her audience is only moderate in size, the ATO notes, yet the overall impression is of a business: she seeks paid work regularly, negotiates fees and deliverables, and plans her content.
When the creating isn’t a business
Earning, but not a business. The ATO’s table for creators says income from this kind of activity is generally assessable, and to declare it “including non-cash amounts”. Its general page makes the same point for anyone not in business: they may still need to declare certain payments, and one of its examples is “the market value of goods or services you receive in a barter deal”.
A genuine hobby. Here the ATO allows for someone who now and then gets “a small prize, gift or other benefit connected with their hobby without the activity taking on a commercial character.” For a hobby, the ATO says, amounts received are generally not assessable income. Which lane an activity is in is the subject of the hobby or business guide.
Tips that are called gifts
Not everything labelled a gift is a product. The ATO says a business may receive tips or gratuities that “may be described as gifts”, and its list of cash income a business must declare includes tips and gratuities alongside subscription payments. Tips paid during a livestream are covered in the guide to platform payments.
The tax position can change on the cost side too. In the creator guide’s makeup example, products used only in business tutorials are deductible, and products shared with personal life partly so; that is set out in the deductions guide.