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| Trading Stock |
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Methods of valuation Under s.70-45(1) trading stock may be valued by its: Cost - costs of purchase and costs of delivery and preparation Market Selling Value - normally expected sales value Replacement Price - cost of identical replacement stock at the end of the income year Drawings of trading stock Drawings of trading stock by the business owner for personal use, consumption or enjoyment form part of that taxpayer’s assessable income The ATO prescribes standard values for goods taken from trading stock for private use for many businesses |
| Definition |
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Trading stock is "anything produced, manufactured, acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of business, including livestock" – s.70-10 Taxation of trading stock Trading stock is required to be taken into account in determining assessable income – s.70-35(1) Cost Any of the following methods are acceptable as a basis for valuation under the Cost method:
LIFO is not an acceptable valuation method Composition of trading stock Consumables Materials and stores used and consumed in making trading stock are not trading stock Spare parts Spare parts held for repair and maintenance purposes are also not trading stock Both are normally deductible under s.8-1(1) |
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