3.2. Letter of agreement or contract
If an organization chooses to record these non-monetary transactions, it must keep any relevant documentation that supports the recognition of the transactions in its accounting records. For each exchange of services, a contract or letter of agreement should be drafted between parties.
The following points should be included in such a contract or letter of agreement:
- a) Service to be performed by or goods to be supplied for each party;
- b) Value of the services rendered or goods supplied by both parties;
- c) GST/HST and applicable provincial tax numbers of each organization, if applicable (see Section 4).
In cases of service exchange in partnerships, provision may be made to add into the contract a requirement obliging the donor partner to provide a letter detailing the value of the contribution such as shipping charges, production costs, exhibition fees paid to artists, travel and per diem expenses, or technical assistance, in exchange for the organization’s commitment to provide its facilities and services for the exhibition of the work.