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Business Bartering Guide

Trade to Save enables you to sell, exchange or barter goods and services for other goods or services (or for other goods or services and money). 

As with most on-line trade sites the informal exchange of similar product or services on a noncommercial basis will not usually incur tax, accept in certain circumstances. 

Users who trade or barter on-line as a business should be aware of tax obligations that may apply to transactions.

Private Individuals Exchanging Goods or Services

Private Individual
Builder

 GST

You will not be subject to GST unless:
  • You are GST registered and exchange goods and services as part of your business; or
  • You are carrying on a business (including exchanging goods continuously or regularly) and your turnover (including the value of any goods and services you receive in return for your supplies) in any twelve-month period is more than $40,000. In this situation you must register and account for GST.
Income tax

You should not be subject to income tax on the return from the goods you exchange unless:
  • You are in business ("business" is essentially any profession, trade, undertaking or other organised activity carried on for profit) and supply the goods in the course of that business; or
  • You supply goods that you acquired with the purpose or intention of resale.
You may be subject to income tax on the value of goods (and in certain situations, services) that you receive in return for your services.

For specific advice, contact a tax adviser or the Inland Revenue Department. 		Private Individual
Hairdresser


GST Registered Businesses Exchanging Goods or Services

GST Registered Business

Accountant		 GST

If you are both GST registered and exchange goods in the course of your business, each of you must account for GST on one-ninth of :
  • the open (current) market value of whatever goods and services you receive in exchange for your supply of goods or services; and/or
  • Any money that you receive.
You should each provide a tax invoice for your supply showing the agreed open market value of goods or services (and/or any money) that you receive in return for your supply (and all other details required under the GST Act). If the open market value of what is supplied and received by barter is equal, this may mean that the GST effect is neutral (although you still need to include the transactions in your GST return).

Income tax

The value of what you receive in return for your goods and services will generally be subject to income tax. Check the position with your tax adviser or the IRD.		 GST Registered Business

Woodchipper


GST registered person exchanging goods or services in the course of their business with a non-GST registered person or a GST registered person not exchanging goods or services in the course of their business
Registered Business

Pool Table
GST

The person who is GST registered and exchanging goods in the course of their business must account for GST on one-ninth of:
  • the open (current) market value of whatever goods and services they receive in exchange for the goods or services that they supply; and/or
  • Any money that they receive.
    • The GST registered person may be able to claim a "secondhand goods" input tax credit for the purchase of secondhand goods from a non-GST-registered person, if certain criteria are met.* An input tax credit is not available to the GST registered person in relation to services received from a non-GST registered person.

    The non-GST registered person can request a tax invoice in respect of the goods or services supplied by the registered business.

    Income tax

    Regardless of whether you are GST registered, if you are in business and are exchanging your goods or services as part of that business, the value of what you receive in return for your goods and services will generally be subject to income tax. Check the position with your tax adviser or the IRD.

    Even if you are not in business, you may be subject to income tax on the return from goods you exchange if you supply goods that you acquired with the purpose or intention of resale.

    You may be subject to income tax on the value of goods (and in certain situations, services) that you receive in return for your services.

    For specific tax advice, contact a tax adviser or the Inland Revenue Department.
    		Private Individual

    Boat


    *Criteria for secondhand goods credit:
    • The non-registered person must be selling to the GST-registered person goods that are truly secondhand goods (as in that they have had prior use), that are situated in New Zealand;
    • The non-registered supplier must not be a non-resident who has previously supplied the goods to a registered person who imported the goods into New Zealand;
    • The goods must be acquired by the registered person for the principal purpose of making taxable supplies (those taxable supplies not being certain business to business supplies of financial services that attract GST at 0%); and
    • The registered person claiming the secondhand goods credit must keep a record of the name and address of the person supplying the goods, the date of purchase, a description of the goods, and the price paid.

    The above is an overview of possible tax obligations and is intended as a general guide only. You should not rely on it as advice on your own tax position, for specific assistance with your tax position you should contact a professional tax adviser or the Inland Revenue Department.
    In this overview, the word "person" can mean a natural person (individual) or a legal person such as a company or a trust.