This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
End of attention
You need to know
You need to account for changes in the value of your trading stock only if there is a difference of more than $5,000 between the value of all your stock on hand at the start of the income year and a reasonable estimate of the value of all your stock on hand at the end of the income year.
The value of your stock on hand at the start of the income year is the same value as the closing value shown on your schedule in the previous year. This may not necessarily reflect the actual value of your stock if you did not account for the change in value of your stock in the previous year. For more information on a reasonable estimate of the value of stock, see the fact sheet Simplified tax system: simplified trading stock rules - reasonable estimate (NAT 7170).
You can still choose to conduct a stock take and account for changes in the value of trading stock, if you wish.
Is the difference between the value of your opening stock and a reasonable estimate of your closing stock more than $5,000?
Yes, You must account for changes in the value of your trading stock. Go to Step 2.
No, If you choose not to account for changes in the value of your trading stock, go to Step 1. Otherwise go to Step 2.
Completing this item
Step1, If the difference referred to above is $5,000 or less and you choose not to account for this difference, the closing stock values you put in both the Primary production and Non-primary production columns at item P8 on page 3 of your schedule must be the same as the values you put at Openingstock. Do not put your reasonable estimate.
Add up your primary production and non-primary production closing stock values and write the total at M.
Write in the type box at the right of M the code letter you used last year to value closing stock:
- C, cost
- M, market selling value
- R, replacement value.
If this is your first year in business the value of your closing stock will be zero. Write C in the type box.
Go to Cost of sales.
Step2, If the difference referred to above is more than $5,000 or you choose to account for the difference in trading stock, the closing stock values must be brought to account under section 70-35 of ITAA 1997. Read Other businesses for information on how to complete this item.
You must include in your closing stock value at M item P8 the value of all stock on hand, regardless of whether you have paid for the stock.
Last modified: 01 Sep 2006QC 18499