Photography clients sometimes try to barter with professional photographers. Some of the things offered to photographers:
• A credit line. (But this can’t be bartered in Canada because credit lines are part of the copyright law.)
• The promise of exposure. (Contrary to popular belief, exposure rarely, if ever, generates a single dollar for the photographer. How much exposure comes from business portraits on a corporate web site, product pictures in a store’s summer sale flyer, or food pictures in a restaurant menu?)
• Future work. (If a photographer works for free in exchange for the promise of future work, why would the client ever bother to pay? The photographer has already shown they’ll work for free.)
• Gift certificates or products. (There’s a billion-dollar, international athletic shoe company that’s known for offering to pay with shoes.)
• An Ontario resort tries to pay photographers with a free weekend room rental (valid only during the off-season).
• A publisher might offer many free copies of its project (e.g. book, calendar, poster) so the photographer can make some money by selling the items to friends and colleagues. (What photographer wouldn’t love this! )
Here’s the deal on bartering:
Everything bartered is taxable and we’re talking both income tax and sales tax. A photographer must claim the value of goods or services received as taxable income and must remit the applicable sales tax on that value.
However, if the goods or services received by the photographer are for business use, it’s possible the value of those goods or services can be deducted as a business expense and the sales tax refunded.
Examples:
• A Toronto corporate photographer trades $1,130 worth of photography for $1,130 worth of business accounting services. ($1,130 = $1,000 + 13% HST).
1) Photographer claims $1,000 as income and remits the $130 sales tax.
2) Photographer deducts $1,000 for the business expense of the accounting services received and claims $130 as a sales tax credit.
Financially speaking, the photographer breaks even.
• A Toronto commercial photographer trades $1,130 worth of photography for $1,130 worth of gift certificates from a clothing store. ($1,130 = $1,000 + 13% HST).
1) Photographer claims $1,000 as income and remits $130 sales tax.
2) Photographer spends the gift certificates on clothing for themselves and family. Photographer can’t claim any business expenses and can’t claim a sales tax credit.
The photographer gets $1,000 worth of clothing and they’ve effectively paid the sales tax on those clothes. Photographer also has to pay income tax on $1,000.
If a photographer barters with a client, they should still send an invoice showing the value of the photography received. Proper accounting records still need to be kept.
Please check the date of this article because it contains information that may become out of date. Tax regulations, sales tax rules, copyright laws and privacy laws can change from time to time. Always check with proper government sources for up-to-date information.
