Trading System

How it Works
Each neighbour starts out with a balance of 250 samaras, and can move down to a limit of 0 samaras or up to the limit of 500 samaras. As an example, if neighbour A gives neighbour B 40 samaras for two hours of gardening, then neighbour A's balance will decrease to 210, while neighbour B's balance will increase to 290.

To pay a neighbour in samaras, you need to log on to the website, go to View Profiles, then click on the user you want to pay. A block will apear on the right hand side of the page which allows you to transfer samaras. You will have to fill in what the transaction is for, and how many samaras you wish to transfer. When you press submit, the samaras will come out of your account and appear in your neighbours account.

Your balance will show up in a block on the right of the page for easy referencing. Also if you want to check your past transactions, you can look at these by clicking on 'My Statement' on your 'My Pages' block also on the right of the page.

Where Does This Money Come From?
The Sharehood trading system is based on a Local Exchange Trading System (LETS), in which money is created by neighbours as they work. So when you do your hour of gardening, and one of your neighbours is happy to pay you 20 samaras for it, that money is created. All that has happened is that your neighbour now has a debt of 20 samaras to the system, and you have a surplus of 20 samaras from the system. You can spend your surplus with anyone else in your hood, and likewise your neighbour can pay off their debt to the hood by working for anyone else.

This is totally different to the way in which money is normally created by banks as debt (see http://en.wikipedia.org/wiki/Money_creation if you are interested). This means that samaras are not scarce in the same way that the national currency is. We can create money as we need it and pay it back when we work, rather than having to borrow it at interest when we need it and pay it back plus interest by working off the loan. The national currency, by design, encourages a growing debt spiral, an increase in the gap between rich and poor, and instability (every now and then, we need an economic collapse, a war, or a social revolution to bring the system back into line). Our local currency is designed such that none of these problems are inherent to it. If you'd like to read more about any of this, Healthy Money, Healthy Planet by Deirdre Kent is an excellent book.

Demurrage
The thinking behind demurrage is that since most goods depreciate in value, the money we use to represent them, should depreciate as well. This will encourage us to use the currency as a medium of exchange rather than as a store of value, hence encouraging us to invest in real life improvements.

On the first day of each month, everyone's accounts will be charged 2% in interest depending on how far away from the original 250 samaras you are. For example if you had 120 samaras, on the first of the month, this will decrease to 117 samaras. This diagram shows exactly how much you will be charged depending on your balance.

This interest charge should encourage circulation of samaras and discourage hoarding or large debts. It makes it in your interests to keep your balance as close to 250 as possible, whether above or below it. The only way to do that is to trade all the time (or not at all). The 2% interest is thought to be small enough not to discourage trading. It is really only a token charge, meant to create an incentive to trade in samaras.

This form of interest is called demurrage and has been extremely successful in local currencies in Germany and Austria during the Great Depression; in national currencies in Europe during the Middle Ages when all the cathedrals were built; and even in Ancient Egypt when the pyramids were built. You can read more about demurrage here

Where Does the Demurrage Charge Go?

50% of the interest will be directed to a special communal account. As the samaras accumulate, neighbours will be able to apply to spend them for social or environmental projects in their local area. You could use it to pay people to replant the nature strips with fruit trees, to doorknock to get more people involved, to cook and deliver meals to the elderly, or whatever you think you need most in your area.

The other 50% of the interest will be redirected to the admin account of the Sharehood. Since the Sharehood receives no funding from anywhere, these samaras will be used to compensate people who work on the project. Whether that be promoting the Sharehood, running workshops, writing articles, working on the website, or networking the Sharehood with other community groups. If you are interested in taking on any of this work, please let us know (at the moment its all just volunteering though).

However, keep in mind that if the incentive is working correctly, there will not be much currency collected through this system.

Guidelines

• Remember that you absolutely can share things with each other without using this trading system, ie. just out of neighbourliness. This trading system only exists in order to facilitate sharing or exchanges that would not otherwise happen. So if you are loaning a ladder to a neighbour you know, you probably shouldn't charge for it, likewise if you have them over for dinner. However if you are loaning your jackhammer to someone you don't know, or cooking a dinner and dropping it off for someone who wants to buy a dinner rather than cook it themselves, feel free to charge samaras for it. Ultimately its up to you and your sharing/trading partner.
• Make sure you agree on the amount of samaras that will be transferred before you start work.
• 20 samaras should be thought of as roughly equivalent to one hour of your time. For exchanges where labour is not the determining factor, it is up to you to figure out how much to charge. Just keep that in mind as a general exchange rate, 20 samaras = 1 hour.
• You can sell your goods or services in part dollars and part samaras only where you have to pay for inputs in dollars. ie. if you are driving for someone, you can charge them samaras for your time and dollars for your petrol. In all other cases, please use samaras rather than dollars.
• In order to avoid being charged demurrage, or being charged as little as possible, keep your balance as close to 250 as possible. This means that whenever you sell something, you might want to look through the profiles for something you want, and vice versa. If you build up a large balance and don't know how to spend it, think about long term investments you could use the money on. eg. find someone who will set up a productive vegetable garden for you, or someone who will teach you a new skill you might like to learn.

A Note on Federal Taxation

The Australian Taxation Office has issued rulings that apply to trading in alternative currencies, such as samaras.

The income tax ruling (Taxation Ruling No. IT 2668 dated 13 February 1992) states that consideration (in our case, samaras) which is merely the proceeds of a hobby, pastime, domestic or social arrangement, would not be assessable income for income tax purposes. Examples are given of neighbours exchanging home grown vegetables and the use of informal babysitting. The ruling notes that a large proportion of transactions made through community based groups, such as the Sharehood, would not fall within the concept of assessable income.

Only those transactions which arise from the carrying on of a business or the provision of skilled services may give rise to income tax implications. In such cases, the samaras earnt from the business or professional services may be deemed assessable income, which means you may need to charge an additional tax component in $AUD, which you can include in your tax return.

The GST tax ruling (GSTR 2003/14 dated 12 November 2003) will not apply to most of the members of the Sharehood. It is only relevant where a member is registered or required to be registered for GST and trades in the course of their business enterprise. If you are in this situation, you should make yourself familiar with this ruling.

Your tax position is an individual matter and an individual responsibility. The Sharehood takes no responsibility for collecting or policing tax. Under law, it cannot prevent the Australian Tax Office obtaining access to view our documents and trading records.