In Australia these kind of deals are treated like income.

https://www.ato.gov.au/businesses-and-organisations/gst-exci...

I am sure people avoid the tax element this way, but it's not a sustainable way to go.

Let's say I do a website for $5,000 (putting aside that this a dead industry, and my career for the past 20 years) and the landscaper comes to do the work at my house.

If he cuts a powerline, falls down a hole or chops off his hand, we have a big insurance problem. No paperwork, no contract.

I have had friends who did their side of the contra deal and never got the other part of the bargain fulfilled.

Things like 'I'll paint your house if you can help fix up this old car of mine.'

I have turned down these deals in the past. Same as someone asking me to work for free for 'exposure'.

I am not having a go at the comment above as I think the point is valid - small business doing this is fraud, big business do it and it's fine.

Just my advice to anyone thinking it might work for them. Send the invoice, do the work, get paid in money.

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RobotToaster 3 hours ago | parent | next [-]

I think the fact that it's treated as income is the point.

My company builds your company a website, and "charge" $1,000,000 for it.

Your company mows my company's lawn and "charge" $1,000,000 for it.

Both companies now have $1,000,000 in revenue from this transaction.

	▲	danielmarkbruce an hour ago \| parent \| next [-]
		lol, no, unless you are saying "revenue" as in "revenue under my made up accounting system". Under ASC 606 you can't just allocate any old number you like. On top of this, no auditor would sign off on what you suggested. The IRS would be looking at you and get you on tax fraud, you'd be committing securities fraud, bank fraud, wire fraud and 26 other things I can't think of.
	▲	osullip 3 hours ago \| parent \| prev \| next [-]
		Yeah, I agree. If all transactions are reported and treated like a sale. I just have personal experience where the person offering from one side often wants to avoid the tax. In Australia we have 10% GST/VAT. Pay someone and there is 30% payrol tax (even as a sole trader). Then 12% mandatory pension contribution. So the $5000 website/landscaping turns into 3k cash in hand. Enticing to avoid this if you can, but I am risk adverse - clients pay me off the back of this. It balances the risk appetite of a business owner who could cut corners, with me sayng not to. If they do, at least I made the risk clear. But your point is valid and correct. There is nothing wrong with contra deals where it's booked properly.
	▲	mattnewton 2 hours ago \| parent \| prev [-]
		But they also have 1,000,000 of expenses, at least some of which is probably deductible from income.

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singleshot_ an hour ago | parent | prev | next [-]

> No paperwork, no contract.

Two adults, a legal subject, sufficiently specified, offer, acceptance, consideration, mutual assent… a contract.

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3 hours ago | parent | prev [-]

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