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  • #982091
    WvdL
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    Hi all,

    I am a designer of digital scrapbooking supplies and operate as a sole trader. In this industry it is common to have a ‘Creative Team’. A creative team member is someone who makes digital scrapbooking layouts with the designer’s products and posts them to galleries, their blog, social media sites etc and in general just promotes the designer and their products. In return, the creative team member gets free access to the designer’s digital products. So no real money is involved. They do sign a contract (to confirm the above described) and to protect my business for copyright issues for example.

    My question is: does having a creative team have any impact on my tax?
    I cannot seem to find any info on this topic and have been trying to contact the ATO all day, but can’t get a hold of them.

    Any info would be highly appreciated!

    #1134881
    Healthy Personal Finances
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    Providing they don’t meet the definition of a paid employee (which it seems they don’t especially with the contract in place), then I don’t see how it would impact your tax.
    If the salary is zero, there is no superannuation or PAYG with holding that you need to worry about. It does mean that as they are not employees, you cannot claim any expenses in relation to them either.

    Hope this helps.
    Stacey

    #1134882
    al.giffard
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    Hi there WvdL,

    The short answer is no, your volunteers are unlikely to impact your tax. It shouldn’t really impact any area of your business for tax purposes.

    Hope that helps. Did you have any particular concern about how it might impact?

    Al

    #1134883
    WvdL
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    Thanks guys!

    I was just wondering if having a creative team concerns the tax office at all and if they should know about it. Because I guess they’re technically not employees because they don’t get a salary, but they do promote my business and get some products in return. So basically I want to know if I can just go ahead and ‘hire’ a creative team without letting the tax office know, or if I have to fill in special forms or do something different with my tax return.

    Thanks again!

    #1134884
    CindyK
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    Hi,

    The only time I would say, as has been mentioned, that it would impact your tax is if those people were at some point classified as employees by legislation or Fairwork.Then you would run into issues with minimum wages, super and tax withholding.

    There are very few avenues for volunteers outside the ‘Not-For-Profit’ sector, so be careful about classifying them that way.

    Perhaps someone here has information on mutually beneficial work/contract arrangements and contra deals in this type of situation.

    Have a great weekend!

    #1134885
    al.giffard
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    The arrangement may well be a form of barter transaction, give you’re exchanging something of value for something else of value. The tax treatment of barter transactions is outlined here: http://www.ato.gov.au/content/downloads/bus35349_n9748.pdf. Broadly, you include the value of what you’re getting as income, and the value of what you’re giving away as a deduction.

    Whether you feel it’s a barter arrangement or not, it sounds like the net impact is likely nil. The value of the promotion you’re getting and the value of the access you’re providing to the digital products is presumably the same – so you could report one amount as income and deduct the same amount as expenses, but the net result is the same. Therefore there’s no big risk in treating it incorrectly. It might work out a bit different if you’re registered for GST and your creative team are not.

    Best course is to have a chat to your accountant, who can consider your exact situation, because it’s hard to know all the details over a forum – but on balance, it sounds like there’s unlikely to be much impact on your tax situation, regardless of how you treat it.

    Hope that helps,

    Al

    Standard Disclaimer: This is general information or my opinions, and is not professional advice.

    #1134886
    WvdL
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    • Total posts: 25
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    Thanks Cindy and Al!

    It looks like it could be a barter transaction indeed. But the products the creative team member would receive a month are only worth around $20-30. Is this still something that should be thoroughly recorded? So I should make invoices etc for every product they get? And then just assume the return for me to be of the same value (but I cannot get an invoice from them, as most of them are not in business, they just do this as a hobby). I am not registered for GST.

    Well, thanks again!

    #1134887
    WvdL
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    Ok, so I got a hold of the tax office:)
    It looks like it is a barter transaction indeed. So I should act if I were to sell those products to the creative team members (so that’s the dollar value I have to declare as income) and I have to come up with a dollar value of the services the creative team members provide. But as Al suggested, that is likely to be of the same value as the products I give away, so the net impact is 0.

    And if I understand correctly, you only have to declare this as assessable income if it’s above $300 a year
    http://law.ato.gov.au/atolaw/view.htm?docid=ITR/IT2668/NAT/ATO/00001
    (nr 8)

    So as long as I don’t give away more than $300 a year worth of products I don’t have to declare anything to the tax office?

    Thanks again,
    Willemijne

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