CES and Taxation, GST and Centrelink

What about the Taxation Department?

Accountability for taxes incurred by Traders is the obligation of those involved in an exchange. A CES has no obligation or liability to report to taxation authorities or to collect taxes on their behalf.

The following advice was provided to LETS Maleny Traders in 1992, from a reading of the Taxation Ruling and through discussions with Taxation officials. Traders can heed this advice, but should consult the Ruling and/or the Australian Taxation Department for a definite ruling for each individual case if they feel unsure about any matter.

In summary, if you earn Ecos whilst providing a service which is your main profession, officially, you must pay tax on all profits OVER 300 Ecos, as if you had earned dollars. Ecos are also deductible so if you spend Ecos on your business expenses you may declare it.

For example: if your main profession is a plumber and you do some plumbing work to the value of 700 Ecos then 400 Ecos is considered taxable at the normal rate. If however you spend those 400 Ecos on bookkeeping or other business expenses then the profit you have made in that year is only 300 Ecos and the tax department don’t want to know about it. Also if you earn Ecos as a handyman (ie put up a chook shed) then this is not considered as earnings under your main profession (plumber) and is exempt from income tax.

If you are concerned, you can contact the Australian Taxation Department can request a copy of the Taxation Ruling IT 2668 Issued 13th February 1992. Reference No 1 1013044. Subject Reference: Barter transactions/Counter trade Transaction. ISSN 0813 – 3662

Capital Gains Tax only applies to personal use assets o$5,000 in value. (para 13).

Valuation: The Tax Department will normally accept the “fair market value” for the valuing Units. For business transactions (only one accessible) this would be the cash equivalent of the goods, and would be equal to one dollar unless it can be shown that trades are consistently at a different value. (para 15)

What about the GST?

Current advice is that the turnover limit for non-profit associations for GST registration is $100,000.
Traders who are concerned about this are advised to check the Australian Tax Office web site
Anyone who seeks a ruling from the Australian Tax Office, regarding CES transactions, needs to re Trader to cite the “counter trade organisations”, as defined in Tax Ruling IT2661.

What about the Centrelink?
According to information recorded in 1992, the Department of Social Security (now Human Services) exempts all CES 8income from declaration, so it will not affect any benefit or pension. However you should not allow CES trading to interfere with your obligations to be available for work or training programs.