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Business Tax Tip – How to enter Bartercard bookkeeping accounting (Trade Exchanges)

images/Bookkeeping.JPGIn our previous post we explained all about how the Australian Tax Office views Barter and Trade Exchanges – in summary you have to record and report as if they were REAL money transactions.

Here is a summary of how to record in your accounts in MYOB, Xero, Reckon, Quickbooks – from the Xero support community

Set yourself up a new bank account called Bartercard - there wont be bank feeds but you can then pay invoices from this account and also receive payments into it by completing the payment section at the bottom of an invoice. You could use a spend money to take accounts of the fees.”  Business Buddy.

And further comment -

Yes simply treat Bartercard exactly the same as any other method of financing, such as a bank account or credit card account. The Bank Feed does work but at month end only and is the easiest way.
As a Chartered Accountant using Bartercard ourselves, and with lots of clients using Bartercard, it is really simple - treat Bartercard income and expenses exactly the same as cash income and expenses, pay/claim GST exactly the same, record income / profits / expenses exactly the same as if it were cash. 
So, although your transaction is similar to acquiring say a stock item for $10k and selling it for $45k, that's a profit of $35k that would hit the P&L. However when the $T (Bartercard Trade Dollars) are spent on (say) accounting fees, stationery, cleaning etc in the business, these expenses are tax-deductible, and if all the $T is spent in the business, this ends up as tax neutral. Other than the cash saving by making these payments in $T instead of cash, that is a real cash profit the organisation has made and like any other profit, will hit the P&L positively.” Ian Malcolm.

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