Steam market limits

It's not a personal expense if it's incurred in the course of business (in my country, at least). If you are classifying Steam trading as a taxable venture (and therefore, a business), then at the very least, a proportion of your computer expenses, electricity, and even rent/interest on your mortgage on a pro rata basis, in respect of the area of your house which is dedicted to the "business" of Steam trading becomes an allowable deduction against any "profits" from said trading.

If you are being taxed on the profits, it would be wholly unreasonable not to be able to reclaim the expenses incurred in the creation of these profits. As far as things go in New Zealand, if you're not running a business venture, there is no tax implication. There is no provision whatsoever for "hobby" income, as you describe it.

The fact is that you wouldn't get away with what you are proposing in New Zealand. There is no way the NZ IRD would even consider viewing Steam trading as a legitimate business operation, not least because it isn't a profitable business when you consider the assets and expenses which you could attribute to the operations under current NZ tax law. Also, there is no money - simply an internal credit, redeemable only within the closed system of the Steam Store. If allowed, just about everyone would make a loss, and offset it against their genuine business income! The Revenue would laugh you out of court. It's a hobby, and a hobby is neither a business, nor taxable in this country :)

While it's true that NZ does have fairly lax tax laws compared to most other developed countries, with particularly glaring loopholes in the capital gains taxation system (ie there is none!), if what you say is correct, I think it's entirely unreasonable to tax people for what, in most people's cases, is very minor income which (barring Paypal shenanigans for which there is no audit trail within Steam anyway) is locked into the Steam system. Furthermore, disregarding the expenses incurred in making the "profit" such as the games purchased in order to acquire trading cards, the computer hardware and other expenses required to actually carry out the "taxable" activity, and the other costs of this venture seems massively unfair.

The obvious view is that Steam trading is simply means of acquiring credits in a trumped up discount system, allowing users to accumulate a virtual balance, which is then redeemed against in-store items. If the money leaves the system via Paypal, etc, that's another issue, but it's utterly untrackable within the Steam system, and non-existent in terms of the figures which could find their way to the IRD.

Still, I guess the US needs every cent it can lay its hands on these days, so I guess I shouldn't be too shocked that they are leaving no stone unturned in their drive to balance the books :)