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Income Tax Act 2007

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

EB 4: Trading stock valuation methods

You could also call this:

“How to value your trading stock for tax purposes”

When you have trading stock, you can value it using different methods. The main ways to value trading stock are:

  1. Cost: This is how much you paid for the stock.
  2. Discounted selling price: This is the price you plan to sell the stock for, but with a discount.
  3. Replacement price: This is how much it would cost to replace the stock.
  4. Market selling value: This is how much you could sell the stock for right now.

If you don’t sell a lot of stock (a low-turnover trader), you can use a different method to value your closing stock. You can find out about this method in section EB 14.

In some cases, you might need to value your closing stock using a special method. You can learn about this in section EB 23.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514291.

Topics:
Money and consumer rights > Taxes
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EB 3: Valuation of trading stock, or

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

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EB 5: Transfers of trading stock within wholly-owned groups, or

“How stock transfers between companies in the same group are treated for tax purposes”

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

EB 4Trading stock valuation methods

  1. The standard valuation methods for trading stock are—

  2. cost:
    1. discounted selling price:
      1. replacement price:
        1. market selling value.

          1. A person who is a low-turnover trader may value closing stock by a method described in section EB 14.

          2. In certain circumstances, a person may value closing stock under section EB 23.

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