Barter Agreement Template (Canada)
Updated on August 13, 2026
A barter agreement documents an exchange of goods or services between two parties without cash changing hands — each party agrees on what they're providing, its value, and when and how the exchange happens.
The widely circulated US free version of this document names its own parties inconsistently, says nothing about who owns the goods or bears the risk of loss before delivery, and has no tax content at all — despite the CRA treating a barter as within the scope of ordinary income under sections 3 and 9 of the Income Tax Act, and as attracting GST/HST on the fair market value of what's received. This template fixes the party-naming error, adds title and risk-of-loss terms, and states the Canadian tax position plainly.
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Barter Agreement
This Barter Agreement is made on between of ("Party A") and of ("Party B", together with Party A, the "Parties").
1. Description of the Exchange
- Party A provides:
- Fair market value:
- Party B provides:
- Fair market value:
Each Party represents and warrants that it has full legal ownership and authority over what it is providing under this Agreement, and that there are no liens or encumbrances on it.
2. Right to Inspect
Each Party may inspect what it is to receive under this Agreement for days following delivery. If a defect or discrepancy is found, the inspecting Party shall notify the other Party in writing, and the other Party shall have days to remedy it by repair or replacement.
3. Value and Balancing Payment
If the fair market values stated above are unequal, shall pay the difference to the other Party at the time of delivery.
4. Title and Risk of Loss
Ownership of, and the risk of loss or damage to, each side of the exchange passes to the receiving Party only upon delivery as described below. Before delivery, each Party bears the risk of loss for what it is providing.
5. Delivery
Delivery of both sides of the exchange shall take place on at . Each Party shall exercise reasonable care in packaging, handling and transporting what it provides until delivery.
6. Tax Treatment
The Parties acknowledge that the fair market value received under this Agreement may be treated as income and may attract GST/HST, and that each Party is solely responsible for its own tax and GST/HST reporting arising from this exchange.
7. Termination
Before delivery, this Agreement may be terminated by mutual written agreement of the Parties. If either Party commits a material breach and fails to remedy it within days of written notice, the non-breaching Party may terminate this Agreement and claim reasonable compensation for any resulting loss.
8. General
This Agreement is governed by the law of , constitutes the entire agreement between the Parties, and may be amended only in writing signed by both Parties. If any provision is held unenforceable, the remaining provisions remain in effect. Notices under this Agreement shall be in writing and delivered to the addresses stated above.
Party A
Date:
Party B
Date:
A barter is taxable, not a way around tax
The CRA's position, set out in Interpretation Bulletin IT-490, is that a barter transaction falls within sections 3 and 9 of the Income Tax Act — in an arm's-length barter, each party is treated as considering the value of what it receives to be at least equal to the value of what it gives up. If the value of the consideration for a supply is not money, GST/HST applies to the fair market value of that consideration at the time of the supply. A barter agreement that says nothing about this leaves both parties to discover it later, often at tax time. This template states the position directly and requires the parties to agree the fair market value of what each side is providing, which is also the figure each side needs for their own tax and GST/HST reporting.
Decide when ownership and risk actually pass
The free version has an inspection and value-adjustment mechanism but never says when title to the goods passes, or who bears the risk if goods are lost or damaged between signing and delivery. This template adds both: ownership and risk pass at the delivery point stated in the agreement, not before, so neither side is exposed to loss of goods they don't yet own or haven't yet given up.
A goods-and-services structure, not goods-only
Many real barters exchange a service for goods, or a service for a service — the free version's structure only really works for a straightforward goods-for-goods swap. This template lets each party's side of the exchange be described as goods, services, or a combination, with the same inspection, valuation and delivery mechanics applying either way.
Clause-by-clause guide
- Parties
- Identifies Party A and Party B consistently throughout the agreement.
- Description of the exchange
- What each party is providing — goods, services, or both — described specifically enough to be checked against on delivery.
- Fair market value
- The value each party assigns to what they're providing, used for any balancing payment and for each party's own income tax and GST/HST reporting.
- Right to inspect
- Each party's right to inspect what they're receiving and raise any defect before accepting it.
- Balancing payment
- If the two sides' values differ, the party receiving the higher-value side pays the difference.
- Title and risk of loss
- Ownership and the risk of loss or damage pass at the delivery point stated in the agreement, not before.
- Delivery
- When and where each side of the exchange is delivered.
- Tax treatment
- States that income tax and GST/HST may apply and are each party's own responsibility to report.
- Termination
- How the agreement can be terminated before delivery, and the remedy for a material breach after delivery.
Canadian compliance checklist
Barter tax treatment applies regardless of what the agreement says — confirm your own income-tax and GST/HST position with an accountant.
A barter falls within ordinary income under the Income Tax Act
The CRA's Interpretation Bulletin IT-490 treats a barter transaction as within the scope of sections 3 and 9 of the Income Tax Act; in an arm's-length exchange, each party is treated as valuing what it receives at least as highly as what it gives up.
Canada.ca — Archived Interpretation Bulletin IT-490, Barter TransactionsGST/HST applies to non-monetary consideration
Where all or part of the consideration for a supply is not money, GST/HST is calculated on the fair market value of that consideration at the time the supply was made — a service that would otherwise attract GST/HST still attracts it when paid for in a barter.
A genuine arm's-length value generally stands
Where the value of what's given up can't readily be determined, the CRA will generally accept the value of what's received as the sale price for a barter between arm's-length parties, which is why this agreement requires the parties to state the value of each side of the exchange.
How to use this template
- Identify the parties. Enter Party A's and Party B's names and addresses.
- Describe each side of the exchange. Describe what each party is providing and agree its fair market value.
- Set the delivery terms. Enter the delivery date and location for each side of the exchange.
- Add any balancing payment. If the values differ, enter the balancing payment and who pays it.
- Sign and keep a copy for your tax records. Both parties sign, and each should keep the agreed values for their own income tax and GST/HST reporting.
Frequently asked questions
Is bartering actually taxable, or is that just for businesses?
It applies wherever the barter is part of your business or income-earning activity — the CRA treats the fair market value received through bartering as ordinary income under sections 3 and 9 of the Income Tax Act, the same as an equivalent cash transaction.
Do I need to charge GST/HST on my side of a barter?
If you're GST/HST-registered and the barter is part of your commercial activity, generally yes — GST/HST applies to the fair market value of non-monetary consideration in the same way it applies to a cash sale.
Who decides the value of what's being exchanged?
The parties agree it between themselves. In an arm's-length exchange, the CRA generally accepts the value of what's received as the sale price, especially where the value of what's given up can't readily be determined.
When does ownership of the goods actually transfer?
Under this template, at the delivery point stated in the agreement — not at signing, and not before. The risk of loss or damage transfers at the same point.
Can I barter a service for goods, not just goods for goods?
Yes — this template lets each side of the exchange be goods, a service, or a combination, with the same valuation and delivery mechanics applying either way.
What happens if the goods are damaged before I even inspect them?
Because risk of loss doesn't pass until delivery under this template, damage before that point is the delivering party's responsibility to resolve, not something the receiving party has to absorb.
Can either party back out before the exchange happens?
Yes, by mutual written agreement, or unilaterally for the other party's uncured material breach. Once delivery has happened, backing out is a breach subject to the agreement's remedies rather than a simple withdrawal.
Related templates
Disclaimer
This template and guide are for general information only and do not constitute legal or tax advice. Barter transactions have real income-tax and GST/HST consequences. Confirm your specific tax position with an accountant before relying on this agreement.
