Income tax : motor vehicle dealers : valuation of stock on hand : motor vehicles traded in
FOI status:may be releasedFOI number: I 1013913
|This Ruling, 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 Ruling is a public ruling and how it is binding on the Commissioner.
[ Note: This is a consolidated version of this document. Refer to the ATO Legal Database (http://law.ato.gov.au) to check its currency and to view the details of all changes.]
What this Ruling is about
2. Motor vehicle dealers often retain traded vehicles for the purposes of resale in the normal course of business. Where these vehicles remain on hand at the end of the year of income, section 70-45 of the ITAA 1997 allows a motor vehicle dealer the option of valuing each of the vehicles at its cost, market selling value or the replacement value.
Market selling value
- an independent valuation; or
- a recognised industry guide.
Date of effect
8. This Ruling applies to years commencing both before and after its date of issue. However, the Ruling 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 Ruling (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).
9. An industry practice has been to value a traded-in vehicle at a notional cost. This notional cost was the actual cost adjusted for any under or over allowance. This treatment is not consistent with section 70-45 of the ITAA 1997 and should not be used.
11. A recognised industry guide represents average values only and is less accurate for individual vehicles. An industry guide only provides an adequate valuation when applied to all such stock on hand.
- where a recognised industry guide is used to determine the replacement value of a trade-in for the purposes of section 70-45 of the ITAA 1997,
- then this method must be used for all trade-ins valued at replacement value for that income year.
Commissioner of Taxation
23 September 1993
- motor vehicles
- trading stock valuation methods
ITAA 1997 70-45