- The value of the goods and services when sold are calculated as appropriate income, just as in the case that barter expenditure is allowed as a taxable claim. It works both ways, just the same as cash.
- f a business is registered for GST (goods and services tax) or VAT (value added tax), or TVA or other applicable taxes in an appropriate country, then the ‘Trade Dollar is treated as AUD $1 = T$1 or British Pound 1£ = T£1. Basically, it is treated as one unit of currency for exactly one trade dollar. Therefore, if you are due a tax refund because you have spent trade dollars, and if your accountant determines that you can claim a refund, you will be paid the refund in cash dollars. The Australian tax ruling on this is IT2668
- It is therefore very important to keep detailed records of all payments and sales accordingly. This is why Trade Gate sends out monthly statements to its members, showing exactly the amounts, members involved in all transactions and the dates.
- Because barter is a legally binding contract, the terms and conditions governing the transactions are covered in a membership agreement.
- Although Trade Gate stamps out attempts to overcharge, it is actually illegal to overprice goods and services, as under ABN rules, because only a fair market value is allowed. This value is researched by a Trade Gate account manager, who is responsible for allowing a transaction to go ahead anyway. Our Terms and Conditions explain this, which can be viewed at www.tradegate.au/terms-conditions/
- When wishing to trade internationally, barter is legal and will still incur the appropriate local tax obligations. It means that for a transaction to take place, the two countries must be part of the same network. This is particularly attractive for holidays etc. However, on items that have applicable tariffs such as import taxes on new items, i.e. cars etc. costs may prohibit any beneficial advantages. However, for secondhand vehicles, the parameters change somewhat. There may still be some import taxes, but things are still lucrative to trade. Warranties may be a consideration as well.
- Do not try to avoid the taxable implications of barter transactions and try to hide behind unscrupulous loopholes. The ATO is aware that some barter trading facilities are now trying to cover their tracks in what are known as DGR’s (Deductible Gift Recipients), whereby a barter exchange receives a small cash payment in return for a much larger amount in trade dollars. These trade dollars are then used as a way to claim to a DGR non for-profit organisation, who then claim or try to hide behind a much larger tax claim by not denoting the gifted monetary amount, resulting in possible tax advantages. Trade Gate is totally against this practice.
- However, under a sponsorship agreement, trade dollars may be used as a payment, so long as the recipient has a barter account who operates within a member base. Normal conditions apply, just as if an invoice was issued and the trade dollars received would constitute earnings. They cannot be identified as a gift without the relevant tax implications. But, for the trade dollars used to pay for items that are allowable as tax deductible expenditure, cash identity for receipts given for payment will be accepted for tax purposes.