Taxation Determination

TD 93/51

Income tax: is it always necessary for a retailer to make a police complaint before taking into account stock shortages for working out the value of trading stock on hand under subsection 28(1)?

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FOI status:

may be releasedFOI number: I 1214490

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. No. A police complaint is only one form of evidence of a stock shortage.

2. Where there is sufficient evidence establishing the shortage, the retailer is not required, under subsection 28(1) of the Income Tax Assessment Act 1936, to bring the missing items into the closing stock figure.

Example:

Grant is the owner of a jewellery store. After a physical stocktake and a comparison with inventory records, he discovers several jewellery items are missing. It is not the normal industry practice to report the shortage to the police where the circumstances of the loss are unknown. Accordingly a police report will not be required. Grant will not be required to include the missing items in his closing stock.

Commissioner of Taxation
25/3/93

Previously issued as Draft TD 92/D190

References

ATO references:
NO TOW11

ISSN 1038 - 8982

Subject References:
closing stock;
jeweller;
jewellery;
losses;
police complaint;
retail trade;
retailer;
stock shortage;
substantiation;
theft;
trading stock on hand

Legislative References:
ITAA 28(1)

TD 93/51 history

	Date:	Version:	Change:
You are here	25 March 1993	Original ruling
	29 November 2006	Original ruling + note	Repeal provision note
	6 April 2011	Withdrawn

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