GST 

If your business is registered for GST, the supplies you make may be taxable or, in very limited circumstances, GST-free or input taxed. It is important that you understand the difference between each type of sale and account for it correctly in your records. This can be done by setting up specific columns in a manual cash book or specific account codes in an electronic accounting package.

You are entitled to claim an input tax credit for the GST you pay on your barter expenses, provided you hold a valid tax invoice for barter purchases over $55.00 (GST-inclusive) at the time you claim the input tax credit. However, you should keep records that support all claims for input tax credits.

Cash and non-cash accounting

If you use the cash basis to report your income, you will account for your income when you receive payment and, similarly, you account for your expenses when they are paid. You receive or make a payment in a barter transaction when the recipient of the supply signs the docket or transaction slip to authorise the exchange of credit between the supplier’s and the recipient’s barter account.

If you use the non-cash basis, you will account for your supplies when you have issued a tax invoice or when any of the payment is received, whichever is the earlier. Similarly, you will account for any purchases when you receive an invoice for the purchase or when you have provided any of the payment for the purchase, whichever is the earlier.

Generally, businesses that have barter transactions will also have other transactions involving the exchange of money. The main method used to record income from barter transactions is to include them separately in a cash receipts book.

•	Use a pre-numbered invoice book to record barter and other transactions. This helps keep track of all transactions.
•	Maintain a filing system to keep track of transactions on barter accounts.
•	Record the value of barter transactions expressed in Australian currency in your sales record. You can record this in a separate column in the same cash receipts book you use to record your other sales or in a separate cash receipts book to account for your barter sales only.
•	Perform barter reconciliations between Barter Exchange statements and your sales record at least monthly.
•	Keep the barter reconciliations and the individual barter records for 5 years.

What does a typical system for recording payments from barter transactions look like?

The diligence required in accounting for Barter transactions is the same as that required for cash-based transactions. Basic requirements are:

•	Update and summarise barter transactions into a secondary record such as a cash payments book using individual barter records regularly. Record the value of barter transactions expressed in Australian currency. You can record this in a separate column in the same cash payments book you use to record your other purchases or in a separate cash payments book to account for your barter sales only.
•	You will need a valid tax invoice if the supplier is registered for Goods and Services Tax (GST) and you wish to claim an input tax credit. A tax invoice for a barter transaction needs to include the GST-inclusive price expressed in Australian currency ($550 in the example above) or the GST payable in Australian currency ($50 in the example above).
•	If a barter supplier (including a contractor) does not provide you with an Australian Business Number (ABN) you must calculate 48.5% of the market value of the goods or services that you provide as payment for the supply. You must remit this amount to the Tax Office unless one of the exceptions to withholding applies.
•	Keep all invoices and file in a systematic manner.
•	Perform reconciliations between individual barter records, Barter Exchange statements and payments book at least monthly.
•	Keep the barter reconciliations and the individual barter records for 5 years.
•	What type of record keeping system should my business use?
•	The Tax Office does not prescribe a defined method for preparing and maintaining a record keeping system, however, the record keeping system you keep should allow a tax officer to work out your tax and superannuation liabilities within a reasonable time. For example, a tax officer would be able to work out your barter related tax liabilities and credits by reviewing your Barter Exchange statements and barter sales and purchases records without having to reconstruct your barter transactions.
•	The types of records needed will depend upon the nature and size of your business. For example, if you have many transactions and source documents per day, it is beneficial to keep summary records such as cash receipts and cash payments books. This will help you to manage your business because you can monitor how much money your business is receiving and spending, and this will assist in identifying any cash-flow problems. It will also help you to complete your activity statements and tax returns correctly and on time.
•	Good record keeping is where you maintain a good filing system of invoices and purchase documents, record transactions or summary totals into a cash receipts and cash payments book and reconcile these amounts to bank statements and Barter Exchange statements on a regular basis.
•	Other relevant documents that you should retain are your Application for Membership of the Barter Exchange, the Rules of the Barter Exchange and any other documents governing the relationship between members, and between the members and the Barter Exchange.

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