Building contract discounting

Welcome Spiderman,
My business works in very close with a few builders but one often asks if we can exchange services.
For us it works well and we have both noticed that it has strengthened our working relationship.
This builder often is my first choice when I need some work done and I don’t think he uses any other cleaner to clean up after his team.

First we came to an agreed price with the help of our accountants.
For every 2 hours my team works we get 1 hour credit for when we have some building work done.
Presently we are about 100 hours in credit.
The ratio difference is because builders use more equipment and raw materials than we do and this was factored into the ratio.

Most of the work my business does is through real estates (trying not to promote but explaining working arraignment).
From time to time we are asked to get something fixed or built and we then ask one of our contacts to do the work.

Only with having a builder who owes us means his debt to us is reduced and we invoice the client for the work he has done and receive payment.
I am not sure but I think barter card works something like this (anyone out there know?).

My building friend includes the builders clean and landscaping and it’s maintenance in his quote to his client.
When we do the work he keeps the money, which improves his cash flow.
Small as this arraignment is it has benefited each of us.

Now as far as tax is concerned.
Only money received is declared as income in the month/ year received.
Naturally all businesses out there have an account or two that takes a few months to pay.
As for costs other than labour such as building materials or turf their purchase value is the assumed value in an exchange unless agreed otherwise.

So by paying your builder with an asset for tax purposes the cost price is it’s value.
An asset can be a house or a barrow of bricks for tax purposes.
Remember after the house is finished its value will be more than the sum of its parts and the builder in this case could pick up a little extra bonus in capital gain.

Remember that the exchange of ownership should take place only after the agreed contract of work has been done to your satisfaction.
Have your solicitor draw up a suitable contract.
Remember to give yourself one or more out clauses as things change and s-it happens.

Have a chat with your accountant then your solicitor then go back and negotiate with your builder for a win win situation.
I say win win because if it works this time guess what you will do it again and again.
TEAM= Together each Achieves More.

And if there is anyone in Sydney who may be interested in an exchange than I am happy to discuss it privately.
Hope this helps, Colin.

‘Never consider the possibility of failure; as long as you persist, you
will be successful’ Richard Denny

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