Does Your Bartering Have any Canada Tax Implications?

For many tax payers they really don’t understand the legal context of what bartering is. Putting it in good old layman’s terms it simple means exchanging goods or services for other goods or services. For example, you may be an electrician, and you offer your services free to a plumber who in turn offers his plumbing services to you in exchange for this. No actual money is passing between the electrician and the plumber.


Sounds like a fair exchange doesn’t it? Nice clean simple trade of services. However, in the eyes of the CRA this sort of trading of services has tax implications to it. Many businesses don’t realize this and it can make your tax situation a whole lot more complicated. No need to worry however, if you are using the services of a Toronto tax accountant who will be able to take the proper steps to include these types of transactions in your tax filing.


The CRA is taking a keen interest in this because of the modern technology of the internet and the multitude of ways that bartering online can be done. Instead of money passing hands it has become credits.


The bartering here refers to an arm’s length transaction. It is assumed that both the electrician and the plumber would consider the value of their services to be equal.


The CRA would likely view this as both an income and expense for both parties. For the electrician the services he gives to the plumber would be considered the expense, but the services he receives from the plumber would be viewed as income. The reverse would be applicable to the plumber. Now this covers the income expense sector of the Income tax act.


If it happened to be an exchange of property between two parties then it could have tax implications referring to receiving or disposing of capital property.


Bartering is more applicable to the business sector and legally has to be included in the financial records. What can seem like a simple exchange of service transaction that suits both parties quite nicely it can create some potential tax problems without realizing it.


Be sure to utilize good bookkeeping services for your business, and acquire the services of a Toronto accountant. These are the types of problems that he can deal with to save you a whole lot of Canada tax headaches.

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant


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