The simplified tax system - a guide for tax agents and small businesses

General trading stock rules

The general trading stock rules apply to you as an STS taxpayer where:

• the change in the value of your trading stock is more than $5,000, or
• the change in the value of your trading stock is $5,000 or less but you choose to do a stocktake and account for the change in value.

The general trading stock rules also apply to taxpayers who are not in the STS.

If the general trading stock rules apply, you must record the value of all trading stock you have on hand at:

• the beginning of the income year (generally 1 July), and
• the end of the income year (generally 30 June).

One annual stocktake is sufficient to meet tax obligations because the value of stock at the end of an income year will be the same as its value at the start of the next income year.

If the value of closing stock is more than that of opening stock, the difference must be included as part of your assessable income.

If the value of closing stock is less than that of opening stock, your assessable income is reduced by the difference.

Where a business starts during an income year, the total value of stock on hand at the end of that year is included in the taxpayer's assessable income.

Sections within STS trading stock rules

• What is trading stock?
• Trading stock rules for STS taxpayers
• Applying the STS trading stock rules
• General trading stock rules