Chapter 7 Bartering

So far, I’ve examined how to determine whether a supply is made for consideration and if a multiple-element supply is made, how to determine whether the consideration received by the supplier should be allocated to all elements of that transaction. All these transactions were looked at from a supply-for-cash perspective. Where the consideration for a supply is in cash, both the payment itself as well as the value of the payment can easily be ascertained. This is different for barter transactions, especially where no (additional) cash payments are involved.

Bartering is also used for promotional activities. Potential customers can be enticed to make a purchase in return for a non-monetary compensation, e.g. by trading in an ‘old’ item or by performing a service. Some businesses provide goods or services in return for favourable on-line reviews by people with sufficient media coverage (‘bloggers’ and ‘vloggers’). Social media allow ‘free’ access and use in return for personal data of their users. Vouchers can also be used as an instrument that facilitates bartering, e.g. as an instrument for determining the value of the bartered transactions.

In this thesis, I will use the term ‘bartering’ for one or more taxable transactions, where both parties involved will make a supply of (a) good(s) and/or (a) service(s) in return for the other person’s supply. They will, in principle, not (also) make a cash payment for these supplies, unless a cash payment is needed/agreed to settle the difference in value between the supplies made by the parties involved. In the dictionary, bartering is described as exchanging goods or services for other goods or services without using money.1