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Accounting for business trading stock

Explains what trading stock is and that livestock is also trading stock.

Last updated 8 July 2021

Trading stock is anything your business acquires, produces or manufactures, for the purpose of manufacturing, selling or exchanging. Livestock is also trading stock.

Trading stock does not include:

  • standing or growing crops, timber or fruit – these only become trading stock when they are harvested, felled or picked
  • stocks of spare parts held for repairs or maintenance to plant and equipment
  • goods owned by a lending business where the goods are used to earn income by hire or rental, rather than manufacture, sale or exchange, for example furniture, DVDs, catering equipment, tools, vehicles etc.
  • consumables used in manufacturing trading stock, such as cleaning agents or sandpaper.

All businesses must account for the value of their trading stock at the end of each income year (closing stock) and at the start of the next income year (opening stock).

Find out about:

Check what is considered as trading stock and work out if your trading stock's value is increasing.

If a business's trading stock's value has changed by no more than $5,000 you may not have to conduct a formal stocktake.

Find out when general trading stock rules apply to you.

You must account for any business trading stock that you've taken for private use.