Income tax Dates
Trading stock is any property a business owns, that they intend to sell or exchange.
These are examples of trading stock:
- anything that is produced or manufactured to be resold
- partly completed work that would be trading stock if completed
- materials kept to produce or manufacture trading stock.
The following items are not trading stock:
- assets that have been depreciated
- consumable aids (items that are used in the manufacturing process, but do not form part of the finished product)
- spare parts not held for resale
- land
- financial arrangements.
Taxing trading stock
The opening value of trading stock in an income year is deductible, and the closing value of trading stock in the income year is assessable.
The opening value of trading stock in a year must generally be the same as the closing value of the previous year.
Valuing trading stock
If your business owns trading stock, you must value it at the end of each income year.
Disposing of trading stock
How you dispose of your trading stock, and to who, can affect how it is taxed.
Business records
You need to keep good business records of your trading stock, especially when you donate or dispose of it.
Tax Technical information
For more information, see the following items on our Tax Technical website.
IS 14/03: Income tax – Consumable aids
BR Pub 14/08: Income Tax - Timing of disposal and derivation of income from trading stock
Trading stock, Tax Information Bulletin Vol 11 No 9 (October 1999): 15, 16