HOW TO DOCUMENT AND REPORT TO CRA

B.O.O.S.T.© Transactions and Reporting to CRA Reporting B.O.O.S.T.© dollars is no different than bookkeeping done for cash dollars. The sales should be treated as deposits, and purchases should be treated as cheques. Any bartering trade slips that are not yet processed on the statement would be outstanding items on the reconciliation. Do I have to keep all of my invoices? Yes. CRA requires you keep all records of transactions for seven years and this is no different than how CRA regards bank or credit card statements. GST and HST also applies, therefore, taxes received should be collected and submitted to CRA in CASH DOLLARS. Conversely, the refundable GST/HST paid with B.O.O.S.T.© dollars on business purchases is claimed as an ITC on your GST/HST/PST return in cash dollars. It is recommended that you consult your own accountant on how to treat tax issues related to bartering as you may qualify for certain exemptions or be taxed based on special rules. As a guideline, based on our understanding, you may even qualify for certain exceptions. Here are some general rules as they apply to CRA that you need to know about: B.O.O.S.T.© is a recognized under subsection 181.3(3) as a bartering network, of the Excise Tax Act. The effect of this designation is to relieve members of the B.O.O.S.T.© exchange network from having to pay excise tax on barter units accepted in exchange for their supplies of property or services. The members, if registrants, would continue to have to charge tax on their taxable supplies of the property or services provided for the barter units. The tax on such property or services is calculated on the exchange value of the barter units accepted as consideration. PST and GST/HST on Products or Services Sold All taxes that you would have charged on your goods and services had the customer paid cash are still applicable if they are paying in B.O.O.S.T.© barter dollars. All taxes should be charged in B.O.O.S.T.© BARTER dollars to the customer and remitted to the government in CASH. This will offset when you utilize your B.O.O.S.T.© barter dollars and pay the vendor the taxes in trade instead of cash. If you are unsure whether GST/HST or PST should be collected on goods or services that you are selling see CRA IT sections-490, S.3,9,69) and contact your accountant. Commonly asked question: Do I have to recognize trade sales as income for income tax purposes? Generally, you will have to recognize any sales made in B.O.O.S.T.© barter dollars into your income. However, if you are providing a service that is not part of your business it will be treated differently. (eg. A doctor selling personal property such as an electric lawn mower or digital computer) Please contact an accountant who will be able to guide you in which sales are taxable and which are not. B.O.O.S.T.© cannot provide a general answer, as there are numerous complexities in each specific sales transaction. Charitable Donations of B.O.O.S.T.© barter dollars The donation of T$1 is treated as equivalent to $1 for tax purposes – in the same fashion that earning T$1 revenue is equivalent to earning $1 revenue. Personal Donations If a B.O.O.S.T.© dollar donation is made personally, the amount is treated as a non-refundable tax credit, NOT a reduction in taxable income. The first $200 is credited at the lowest marginal tax rate, any donations beyond $200 are taxed at the highest marginal tax rate. The total donations are only eligible up to 75% of the individual’s net income. Corporate Charitable Donations of BARTERdollars up to 75% of net income for tax purposes to registered charities are deductible in computing taxable income on page 3 of the T2 return. It is your responsibility to keep good paper copies of receipts as soon as a trade is made as the B.O.O.S.T.© barter statement showing the donation is not sufficient evidence for the Canada Revenue Agency (CRA). Bartering Used For Prizes and Contests Any prizes won as a result of participation in the tournaments such as sporting events are non-taxable. Personal Purchases made with BARTERdollars Earned by a Corporation If you make a personal purchase out of the company's corporate business account, you could recognize that purchase as income on your personal tax return and an employee benefit expense in your corporate tax return, or use one of the other alternatives for recording the transaction, such as taking dividends or a loan in trade – again, please confirm this information with your accountant as s/he will provide more details. If you operate as a sole-proprietorship or partnership, the personal purchase should not be deducted in calculating your business income. However, the fees generated on these purchases should still be recorded as a tax deductible expense. Records and Documentation Retention All expenses that you are claiming as business expenses need to be supported by receipts/invoices. Again, this is similar to a credit card or bank statement. The B.O.O.S.T.© bartering statement does not act in place of these other documents. In addition to keeping supporting documents for seven years, you are also required by the CRA to maintain your sales records for the same period.