As Ask Bartercard explain, Trade Dollar transactions are assessable and deductible for income tax purposes to the same extent as other cash or credit transactions. Therefore, the advantages and disadvantages are similar to normal cash revenue or expenses. When an entity that is a member of a trade exchange makes a taxable supply to another member, there is a tax liability, including goods and services tax (GST).
GST is paid and received by members in Trade Dollars. For the purposes of the tax laws,
payments such as GST and income tax must be remitted to the IRD in New Zealand currency. They ask that you consult your accountant for further advice or download Bartercard’s free eBook, The Accountants Guide to Bartercard, which explains how Bartercard will work for your accounting systems.
The Accountants Guide to Bartercard explains that Trade Dollars are a well-recognised and accepted method of payment in New Zealand, and one Trade Dollar is equivalent to one New Zealand Dollar for all accounting and taxation purposes. Bartercard is NOT a way for people to avoid tax. Trade Dollar income should be viewed as you would your cash income. There are no inherent tax advantages or disadvantages to being a member of Bartercard. Bartercard is a sales and marketing tool not a tax tool.
A tax invoice is required for a barter transaction, as it is for any other business
transaction. From an accounting and tax perspective, there is no difference between cash and trade dollars, with sales being recorded as income, and purchases being recorded as an expense or asset. Monthly account statements are provided, which are similar to a bank or credit card account, except that the assets or liability is in Trade Dollars and not cash.
Bartercard helps New Zealand businesses grow and achieve financial success through bartering unfilled capacity through the Bartercard network using an electronic currency called a Trade Dollar, so with this in mind, please take a moment to find out more about what is Bartercard and Bartercard members by going to http://askbartercard.co.nz .
