Spot the warning signs of barter credit tax schemes before they cost you.
This tax time, it’s important to steer clear of a tax scheme involving ‘barter credits’ – a form of trade credit used in some business networks.
Described in TA 2025/3 Arrangements to improperly access deductions for donations of ‘barter credits’, the tax scheme involves an individual or business paying for access to barter credits and donating them to deductible gift recipient (DGR) organisations. However, the business network returns barter credits at an artificially inflated value – allegedly worth significantly more than what was paid. The dodgy donor then claims a tax deduction for the full-face value of the donation. This is illegal and deprives the community of essential funds. Beware of any arrangements that have these characteristics.
The scheme is spreading via personal networks, such as friends, family and acquaintances. So, if you see it, or something similar that sounds ‘not quite right’, always check it with us before you act on it.
This, and other similar arrangements, may count as fraud and expose your business to:
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investigation by the ATO
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repayment of the tax with heavy penalties and interest
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legal action.
Further, the scheme can trigger an investigation of the DGRs receiving the donations. Whether or not the organisations are aware of the arrangement, this can negatively affect their operations.
Learn the tax scheme warning signs
You’re responsible for your own tax affairs, even if you act on bad advice. Be wary of people promoting any scheme that promises to significantly reduce or avoid paying tax. Typical warning signs include:
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persistent or pushy behaviour, especially heading into tax time
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charging significant fees or commission based on the tax saved.
Some promoters may even approach you advocating for a good cause, such as offering to arrange barter credit donations to a charitable cause. They may also request you to maintain secrecy.
The ATO tax schemes web content lists examples of the warning signs and the tax schemes they’re concerned about. We recommend you review this important information and stay vigilant this tax time. Remember, if it sounds too good to be true, it probably is!
If you’ve been offered a scheme that you suspect is unlawful, you should reject it and report it to the ATO or speak to us.
Source: ATO
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/newsroom/smallbusiness/ . Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
