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Income Tax Act 2007

Timing and quantifying rules - Valuation of trading stock (including dealer’s livestock)

EB 3: Valuation of trading stock

You could also call this:

“How to work out the value of your business's trading stock each year”

If you run a business, you need to figure out how much your trading stock is worth at the end of each income year. You must use a method that’s allowed under this part of the law to do this.

The value you work out has two important uses. First, it’s the closing value of your trading stock for the income year. This is used in section CH 1 which deals with adjusting the closing values of trading stock, livestock, and certain financial arrangements. Second, it’s also the opening value of your trading stock for the next income year. This is used in section DB 49 which deals with adjusting the opening values of these same items.

However, if your trading stock is a special type of financial arrangement (called an excepted financial arrangement), you need to work out its value differently. In this case, you must use the rules in subpart ED instead.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514289.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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EB 2: Meaning of trading stock, or

“What counts as goods for sale in your business”

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EB 4: Trading stock valuation methods, or

“How to value your trading stock for tax purposes”

Part E Timing and quantifying rules
Valuation of trading stock (including dealer’s livestock)

EB 3Valuation of trading stock

  1. A person who carries on a business must determine the value of their trading stock at the end of each income year by a method that is available under this subpart for them to use.

  2. The value determined under subsection (1) is—

  3. the closing value of the trading stock for the income year for the purposes of section CH 1 (Adjustment for closing values of trading stock, livestock, and excepted financial arrangements); and
    1. the opening value of the trading stock for the next income year for the purposes of section DB 49 (Adjustment for opening values of trading stock, livestock, and excepted financial arrangements).

      1. Despite anything in this subpart, the value of any trading stock that is an excepted financial arrangement must be determined under subpart ED (Valuation of excepted financial arrangements).

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