Taxation Determination

TD 2004/38

Income tax: value of goods taken from stock for private use for the 2004-2005 income year

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FOI status:

may be released

Introduction

1. This Taxation Determination provides an update of amounts that the Commissioner will accept as estimates of the value of goods taken from trading stock for private use by taxpayers in named industries. These updated amounts are contained in the Schedule at paragraph 8. This Taxation Determination applies for the 2004-2005 income year and should be read with IT 2659.

Background

2. The Australian Taxation Office (ATO) has previously issued 'Goods Own Use' (GOU) amounts for a range of industries. These amounts are estimates of the value of goods taken from trading stock for private use by taxpayers in named industries.

Methodology

Selection of industries

3. Industries suitable for inclusion in the Schedule should:

•

exhibit a transformation process of trading stock items (e.g. baking);

•

have as trading stock a range of small items or ingredients, usually of low value;

•

not be suited to inventory systems;

•

have a high turnover of items, often for cash.

4. The Schedule of industries is:

Determination of amounts

5. The basis for determining values of goods taken from trading stock is derived from the latest^[F1] Household Expenditure Survey (HES) results issued by the Australian Bureau of Statistics adjusted for Consumer Price Index (CPI) movements for each category of items. ^[F2] The ABS collects, at varying intervals, detailed information about the expenditure, income and household characteristics of approximately 8,400 households resident in private dwellings throughout Australia. Information is collected during personal interviews and from diaries in which survey participants have recorded all personal expenditure over a two week period. Interviews and diary-keeping are spread over the financial year of collection. At the 'fine' level of expenditure, the survey details household expenditure in over 700 categories of items across a range of household composition groups. ^[F3] It is considered that these survey results provide reasonable and statistically valid estimates as to the community's level of spending on a wide range of items.

6. Using the HES data, consideration has been given to the fine level expenditure items and which items would be present in the trading stock of the Schedule of industries. The stock items are generally limited to the HES 'food and non-alcoholic beverage' broad category, except for Licensed Restaurants/Cafes where 'alcoholic beverage' items are included, ^[F4] and Caterer where some 'household equipment' items are included.

7. The main assumption in calculating GOU amounts is that if a business has an item in stock then the taxpayer would take the item from stock for own use rather than purchase the item elsewhere. The GOU amounts (excluding GST) appear in the schedule at paragraph 8. However, taxpayers should regard these GOU amounts as a guide only. Where a taxpayer considers the values provided in the schedule do not reflect their particular circumstances, they may elect to maintain suitable records^[F5] of items taken from trading stock for personal use.

Schedule for the value of goods taken from trading stock

8. Based on the above methodology, the Schedule for the value of goods taken from trading stock for private use in the 2004-2005 income year is:

Updating the Schedule

9. It is intended to adjust the values annually to reflect either the most recent HES data or the HES data uplifted for CPI movements and reissue the Schedule at the commencement of each income year.

Date of effect

10. This Determination applies to the 2004-2005 income year. However, it does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

Commissioner of Taxation
29 September 2004

Not previously issued in draft form

References

ATO references:
NO 2004/6083

Previous Rulings/Determinations:
IT 2659
TR 92/1
TR 92/20
TR 96/7
TR 97/16

Related Rulings/Determinations:

IT 2659
TR 92/1
TR 92/20
TR 96/7
TR 97/16

Subject References:
private use
record keeping
trading stock
value of goods taken from stock

Legislative References:
ITAA 1936 262A
TAA 1953 Pt IVAAA