Barter transactions and barter-exchange networks

A barter transaction takes place when any two persons (suppliers) agree to an exchange of goods or services without the exchange of money. Suppliers calculate the value of the goods or services at the fair market value at the time of the transaction.

Since a barter transaction is two supplies (one from each party) with two suppliers and two recipients, a supply could be exempt, taxable, or
zero-rated. For that reason, each supplier/recipient must deal with the transactions from their own point of view to find out whether they have to charge, collect, or pay GST/HST on the supply, and whether any input tax credit is available in connection with any GST/HST payable on the supply.

A barter-exchange network is a group of persons who have agreed in writing to accept credits (barter units) on account for the group members in exchange for property or services traded among members.

The accounts are maintained by an "administrator". The administrator is responsible for administering, maintaining, or operating a system of members' accounts to which barter units may be credited. When supplied by a GST/HST registrant, tax applies on the exchange value of the barter unit accepted as payment for the goods and services provided for the units.

The administrator of a barter-exchange network may apply to have the network designated for GST/HST purposes. Members of a designated
barter-exchange network do not have to pay tax on barter units accepted in exchange for their supplies of goods or services. However, if registrants, they would continue to charge tax on their taxable supplies of goods and services provided for the barter units.

If you want to know how to apply for barter-exchange network designation, see How to apply for network designation.