Jim’s TradeNet can be a great benefit for your business - it can improve your cash flow and give you a wider market for your business - but whilst you are using trade dollars to move unwanted stock and make various purchases from other members, you need to remember that these transactions need to form part of your BAS and tax return. You need to treat transactions made through Jim’s TradeNet as part if they were cash transactions for taxation purposes.
What this means is that when you make a transaction using Trade Dollars you need to pay income tax and you need to account for GST. (Don’t claim GST credits on personal purchases!)
Further, Trade Dollar transactions must be taken into account when you decide whether or not you need to register for GST. The current threshold is $75000 dollars. Let’s use some numbers as an example. Let’s say you are a marketing consultant. Let’s say you earned $60000 last year and are not registered for GST. You joined Jim’s TradeNet and expect to make $20000 in Trade Dollar transactions over the financial year. This total combined transaction value means that you would have to register for GST as you are over the threshold. Jim’s TradeNet values one trade dollar at one Australian dollar for taxation purposes.
You can’t pay the ATO using trade dollars - it’s important to not accept too many trade dollars as you will need to find tax to cover the extra obligations you have earned. It may be in your best interest to try to spend any trade dollars you earn on business expenses during that same BAS business quarter.
As I have mentioned already you need to treat trade dollar transactions like australian dollar transactions. You need to provide (and receive) tax invoices - invoices that have your ABN on them and include a GST inclusive amount (if you are above the threshold and GST payments are required).
You also need to make sure that you have proper record keeping. You need to account for all of your Trade Dollar transactions in your Accounting Software as well as all of your documents - invoices, receipts, purchase orders, transaction statements from TradeNet etc.
I am a Bookkeeper and member of Jim’s TradeNet. I know how to properly account for TradeNet transactions in your Accounting Software - ensuring that you meet your requirements to the Australian Taxation Office. I have written an eBook to help explain this process. If you want to purchase a copy of this eBook please get in touch so that I can share it with you.