From Post to Profiting: Influencer Income & Tax Explained

The influencer world isn’t all fun and likes - it’s also a dynamic business with all sorts of income streams rolling in! From brand deals to digital products, the ways influencers can earn are as creative as the content they produce. But with great income comes great tax responsibility. 

In this blog we’ll break down the key tax topics every influencer should know - like the different ways income is earned, how to figure out what type it is, when the Personal Services Income (PSI) rules kick in, how to handle freebies, and what tax concessions might be up for grabs. It’s all about making sense of the money side of influence, one step at a time.

What types of income can an influencer generate?

Influencers can earn money through various channels, including:

• Advertising Revenue: Platforms like YouTube allow influencers to earn money from ads displayed on their videos. Another example is a TikTok creator who can earn income through TikTok’s Creator Fund, where payment is based on video views and engagement.
  
• Channel Subscription Fees: Some influencers offer exclusive content to paying subscribers on their social channels. On platforms like Twitch, for instance, gamers often earn income from viewers who subscribe to their channels for access to exclusive emotes, badges, and content.
  
• Brand Partnerships: Influencers get paid (or receive products/services) to promote brands through posts, events, or endorsements. A fashion influencer might collaborate with a clothing brand to showcase seasonal collections via Instagram posts, reels or stories.
• Affiliate Programs: They promote products using special links or codes, and earn commissions on sales made through those referrals.
  
• Sale of Merchandise: Many influencers use their social media platforms to advertise and sell their own branded products directly to followers. For example, a fitness influencer might launch a line of branded workout gear or nutrition supplements and promote them via their channels.
• Provision of Services for a Fee: Influencers with expert skills can turn followers into clients. With specific expertise, they may offer paid tutorials, virtual classes, or masterclasses. A photography influencer, for example, could provide one-on-one online coaching sessions or personalized photo editing workshops for paying clients.

Now that we have an idea of the different types and sources of income, it’s time to dig deeper into how these transactions are treated for tax purposes.

More on what this all means soon!

Are influencers generating personal exertion income or other business income?

Figuring out what kind of income you’re pulling in as an influencer is key to understanding your tax game. The big question here is:

Is it personal exertion income — money you earn mainly from your own skills and efforts

 or

Is it business income coming from other sources like assets or merchandise?

This distinction isn’t just a technical detail; it’s what determines which tax rules apply to you.

From a tax perspective, business income refers to any earnings you receive in the course of running a business. For influencers and content creators, this includes income from brand collaborations, ad revenue, affiliate marketing, merchandise sales, and content subscriptions (like Patreon). This income is declared as part of your sole trader business and may have deductions available for business expenses. 

On the other hand, Personal Services Income (PSI) is a specific tax concept that applies when most of your income is a reward for your personal skills or efforts, rather than from selling products or leveraging a broader business structure. For example, if you're being paid purely for your time, skill, or reputation (like one-off appearances or producing custom content for a client), it might be PSI. This matters because PSI rules limit some deductions and can affect how your income is treated for tax purposes - especially if you're trying to split income with others or operate through a company. Understanding the difference helps ensure you comply with tax rules and maximise your allowable deductions. Check out our blog on this here.

But here’s the twist: not all influencer income is personal exertion income. Some streams lean more toward business income, such as:

• Advertising revenue and channel subscriptions - because these come from your social media channel as an income-producing asset.
  
• Merchandise sales - which count as business income from trading stock, not personal effort.

• Affiliate commissions - usually business income since you’re earning from promoting products, not selling your personal services.
  

Sometimes your income is a mix - part personal effort, part asset-generated. The more you’re personally involved, the more likely it’s personal exertion income.

So, knowing how you run your influencer activities - your commercial purpose, actual actions, profit goals, consistency, and professionalism - is your secret weapon to mastering your tax obligations and keeping the taxman happy.

Homework: review your income streams and determine which are ‘business’ and which fall under ‘personal services income’.

Do the personal services income (PSI) rules apply to an influencer’s personal exertion income?

Why does it matter to identify personal exertion income and business income? Because personal exertion income can trigger the PSI tax rules, which come with their own set of conditions and limitations. Even if you qualify as a personal services business (which can exempt you from some PSI rules), the ATO is watchful about preventing income splitting or dodging tax through “alienation” (shifting income to reduce tax) of your personal income.

Qualifying as a Personal Services Business: The PSB Tests

To have your influencer income treated like standard business earnings (and not as PSI), you need to satisfy one of these two:

1. Results Test (75% Rule)

What it means: At least 75% of your personal exertion income is paid for delivering specific results.

• You’re paid to achieve an agreed outcome (e.g., host a virtual fitness session).
• You supply your own tools and equipment (like cameras or gym gear).
• You’re responsible for fixing any issues (for example, refunding attendees if the session fails to go ahead).
    

2. 80% Rule + One Extra Test

• 80% Rule: No single client or platform contributes 80% or more of your total income in the year.
• Plus one of these:
  
• Unrelated Clients Test: You have two or more non-associate clients (e.g., individual attendees each pay separately).
• Employment Test: You engage helpers or apprentices for at least 20% of your core work.
• Business Premises Test: You operate from a dedicated business space separate from your home.
  

Homework: check your eligibility and figure out if you qualify as a PSB, or if some or all of your income will still be affected by the PSI rules.

If most of your influencer income rewards your own skills and time, PSI rules are in play - unless you meet one of the PSB pathways. Nail these tests (or get a PSB determination), and you’ll unlock the full benefits of running a business.

Not quite fitting the tests? You can ask the ATO for a formal PSB determination. If you have unusual circumstances or genuine uncertainty, they may officially recognise you as a PSB - letting you claim standard business deductions and treat your earnings accordingly.

Dealing with Non-Cash Benefits: When “Free” Isn’t Really Free

Receiving free products and services is part of the influencer’s world; however, the question remains: is it truly free? If you receive products, services, or experiences as part of your influencer journey, it’s important to remember that the ATO expects you to include their value in your taxable income. No worries - we’re here to break it down for you:

What Counts as a Non-Cash Benefit?

Anything you receive (totally or partly) because of your brand partnerships or promo work - like:

• Free beauty products to review
• Complimentary resort stays for your travel vlog
• Gratis meals at a café in exchange for a shout-out

You must report the arm’s-length value (i.e. what it’d cost if you bought it yourself) minus any amount you actually paid.

When You DON’T Include Benefits in Your Income

• “Otherwise Deductible” Benefits

If you would normally be able to claim a one-off tax deduction for buying something related to your business, then receiving it for free usually doesn’t count as taxable income. Because the ATO treats it like you just got the item without paying for it, but since you’d deduct the cost anyway, there’s no extra tax to pay on the freebie. 

Example: A travel influencer gets a free resort stay because their work (the hotel review) is directly tied to that stay, and if they’d paid for it themselves, they’d deduct it as a business expense. It’s like $450 income (for the ‘free night’) and $450 deduction (for what you would have deducted to if you bought it yourself) = $0 impact, so they don’t care so much.

•  “Non-Deductible Entertainment” 

This one’s about entertainment benefits like free meals or event tickets. If the provider (e.g. a restaurant or hotel) can’t claim a tax deduction for entertainment’, then you don’t include it either. The ATO looks at the provider’s tax position here, not just yours.

Catch: If the provider can claim a deduction - for example, a hotel or restaurant providing free stays or meals as part of their advertising or promotion then you usually do have to include the value of that benefit in your income.

On the flip side, if you get a free coffee or pastry from a local bakery that isn’t in the entertainment business, and the bakery can’t claim a deduction for giving it away, then you don’t need to report that as income.

Tip: Always check whether the benefit is ‘entertainment’ from a business that can write it off. If so, it’s assessable.

Action Steps for Influencers:

1. List every freebie: Products, services, stays - nothing gets missed.
2. Value each item: Use the market price, or get a valuation if it’s a rare item.
3. Check the exclusion rules:
• Is it a once-off deductible business expense?
• Is it entertainment from a non-entertainment business?
4. Declare the rest: Anything not clearly excluded goes in your assessable income.

Understanding these tax rules empowers you to make smarter decisions, so you can grow your influence and your income with confidence. If it’s feeling a little too much, don’t worry we are here to help translate the tax talk and apply it to your business with clear steps forward.

Want to learn more?

Read Part One| Is it a Hobby or a Business? or read Part Three: From Engagements to Expenses: What Tax Deductions can Influencers Claim?