The Accountants

Guide to Bartercard
Bartercard is a business tool that increases profits
through new customers and improved cashflow.

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About Bartercard
Bartercard is a business-to-business (B2B) trade exchange
assisting members to gain new customers. Transactions
are facilitated electronically via the internet, EFTPOS, or by
transaction vouchers similar to those used with a credit card.

Simply put, Bartercard delivers new customers to fill a business’s

spare capacity, these new customers pay with Trade Dollars. The
business utilises these Trade Dollars to pay expenses that would
otherwise have been paid in cash - therefore saving real cash.

Upon joining as a member, Bartercard establishes

an interest free line-of-credit for every new
member based on:
• Size of business, length of time in business, capitalisation and
debt levels.
• Analysis to determine potential increased monthly sales.
• A review of the P&L statement to determine which business
expenses are able to be met through Bartercard.

Bartercard is a registered Financial Services Provider under the

Financial Service Providers (Registration and Dispute Resolution)
Act 2008. Further details can be found in the legal section of our
website. Bartercard is required to comply with the Anti-Money
Laundering and Countering Financing of Terrorism Act 2009.

Trade Dollars are a well-recognised and accepted method of

payment in New Zealand. One Trade Dollar is equivalent to one
New Zealand Dollar for all accounting and taxation purposes.

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How Bartercard works
Bartercard provides business opportunities to members by
converting unutilised trading capacity and excess inventory into
business opportunities with new customers. Bartercard aims to
increase your business by 5 - 10% and increases your cash profit.

Before Bartercard After Bartercard

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What IS Bartercard
(and what is it not)?
What Bartercard IS...
Bartercard helps New Zealand businesses grow and achieve
financial success through bartering unfilled capacity through the
Bartercard network using an electronic currency called a Trade
Dollar.

What are Trade Dollars?

A Trade Dollar is the electronic trading currency Bartercard
members use to transact with. For accounting, GST and
Income Tax purposes, One Trade Dollar (T$1) is equivalent to
One New Zealand Dollar (NZ$1).

What Bartercard IS NOT…

Bartercard IS NOT a Bartercard IS NOT a rewards

daily deals provider or loyalty programme

Bartercard IS NOT a Bartercard IS NOT a way for

pyramid scheme companies to avoid tax.

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Accounting for Bartercard
From an accounting and tax perspective, there is no difference
between cash and Trade Dollars with sales being recorded as
income, and purchases being recorded as an expense or asset.
Bartercard works like a normal bank account or credit card,
except that it uses an alternative, electronic currency (Trade
Dollars) that is exchanged between members to pay for goods
and services.

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Monthly account statements are provided which are similar to a
bank or credit card account except that the assets or liability is in
Trade Dollars and not cash.

You can get account transactions from Bartercard

sent into Xero every month. It’s easy to apply for direct
feeds, simply add your accounts in Xero, download the
application form, then sign and email it to Bartercard.

Working alongside
more than 100 banks
and financial institutions
throughout New Zealand and Australia, MYOB BankLink automates
and streamlines the accounting process for small business clients’
transaction data through to accounting practices.

Check out more information on our website

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Benefits of Bartercard
• Bartercard can increase a businesses sales by 10% within
the first 12 months of being a Bartercard member
(Dot Loves Data, 2011).
• Depending on your membership level, you will be assigned a
dedicated Trade Broker to ensure that increased sales occur.
• Bartercard provides free, local, national and international
advertising. Additional marketing includes Trade Shows,
national emails to members, text marketing and networking
events.
• New cash customers via word of mouth from Bartercard
members.
• Increased market share and a competitive edge over
competitors.
• Members are assured of secure internet transactions, a
pre-approval process and comprehensive record keeping is
provided by Bartercard.
• Sell excess stock without the need to discount, which can
result in reducing perceived value and risking a potential price
war with competitors.
• Bartercard educates members that, by applying the principal of
marginal costing; those goods and services are purchased with
a discount equivalent to the gross profit margin of the goods
and services sold through the Bartercard exchange.
• An interest-free line of credit can be utilised, thereby
conserving cash and improving the company’s balance sheet.
• Using Trade Dollars as employee bonuses, incentive
schemes or gifts is an excellent use of Bartercard. Or setup
each employee with a staff card and you could pay 10%
(for example) of their salary in Trade Dollars.

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Top tips for using
Bartercard strategically
• Offer staff the choice of taking time in lieu in Trade Dollars.
Don’t lose productivity or chargeable time while employee is
away on lieu leave. By offering a higher rate in Trade Dollars
this will incentivise staff to use this as an option.
• Gift cards can be purchased for amounts between T$100 and
T$500 and are ideal for staff incentives, gifts or bonuses.
• A staff account is an ideal opportunity for business owners
who want to divide up personal and business spending, or use
for staff incentives and bonus payments.
• Make use of the interest free line of credit in order to continue
making purchases during times when cashflow has slowed.
• Use Bartercard to attract specific new customers - tell us
about a business you would like as a new customer, we will
approach them to join on the basis that they can spend their
Trade Dollars with you.

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Questions your clients
may have about
Bartercard
Q. What is the accounting treatment of assets bought
on Bartercard?
A. The accounting treatment of assets bought on Bartercard is
identical to assets bought in cash. The depreciation rates and
methods remain the same. If an asset is sold, the depreciation
recovered becomes a taxable income for the business.

Q. What are the tax advantages or disadvantages

associated with Bartercard?
A. Trade Dollar income should be viewed as you would your cash
income. There are no inherent tax advantages or disadvantages
to being a member of Bartercard. Bartercard is a sales and
marketing tool, not a tax tool.

Q. Is a tax invoice required for barter transactions?

A. Yes, a tax invoice is required for a barter transaction as it is
for any other business transaction. Where a member makes
a taxable supply and the consideration is expressed in Trade
Dollars, the tax invoice must comply with all of the usual
requirements for a tax invoice. We suggest you consult your
accountant to discuss this.

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Q. Is it important for a business to keep a balance
between those sales made using Trade Dollars and
those in cash?
A. Absolutely. A sale made in Trade Dollars is no different
from a business managing its Accounts Receivable to ensure
timely payment and adequate cashflow. It is recommended
that a business should have no more than 15% of its sales made
through a Trade Exchange with the remaining business revenue
coming from cash sales. Trading activity should be kept in
balance between Trade Dollars earned from sales and Trade
Dollars used for business expenses.
Trade Dollars used for personal spending are, for tax purposes,
considered drawings and are not tax deductible. Trade Dollars
used in relation to business expenses are generally, tax
deductible. The tax treatment is exactly the same as if the
spending was made in cash.

Q. Is there additional paperwork for barter

transactions?
A. No more than an extra bank account or credit card account.
Bartercard produces a statement similar to that of a bank
showing all debit and credit transactions for the period. An
up to minute version of the statement is also available online.
Bartercard integrates directly with Xero and MYOB via Banklink.

By selling excess or slow moving stock through the

Bartercard community, members can receive Trade Dollars
as payment and in turn spend the Trade Dollars on goods and
services for their business.

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Q. Can I use Bartercard for personal purchases?
A. Yes, if you derive your income from your business to pay for
your personal expenses. By using Bartercard and spending your
Trade Dollars on these personal expenses you will save your cash.
You can draw Bartercard Trade Dollars as personal director’s fees,
drawings or a loan.

Q. Can I charge part-cash and part-Bartercard?

A. Bartercard is a 100% Trading Exchange. Upon joining every
member agrees to trade at 100% Trade. There are practical
exceptions to this rule as there are different proportions for
different industries. Refer to our Fair Trading guide on our website.

Q. How do I convert my Trade Dollars into cash?

A. By purchasing products or services with your Trade Dollars,
you will save cash and keep that cash in your business. You
can also buy items with your Bartercard Trade Dollars and
then sell them for cash, therefore converting Trade Dollars to
cash. For example, a restaurant purchases wine on Bartercard
and then sells within the restaurant for cash. Trade Dollars are
not transferable for cash by Bartercard or any other Financial
Institution.

All information contained in this article is true and accurate to the best of the author’s
knowledge. No liability is assumed by Bartercard, authors or their employees for any
potential liability suffered by any person relying directly or indirectly upon this article. It
is recommended clients consult a Chartered Accountant from the Bartercard directory
or their own tax specialist before acting on this information.

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 HELP YOUR CLIENT GROW
THEIR SALES BY 10%
FORWARD THEM OUR EBOOK

For more information about Bartercard

please visit our website, or follow us on
LinkedIn, Facebook and Twitter.

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