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Income Tax Act 2007

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

EB 13: Low-turnover valuation

You could also call this:

“Valuing stock for small businesses with low turnover”

If you’re a low-turnover trader, you have different options for valuing your closing stock. You can use a standard valuation method, a low-turnover valuation method, or value it as low value trading stock in certain situations.

To be considered a low-turnover trader, the total turnover of your business and any associated businesses must not be more than $3,000,000 or a higher amount set by the Governor-General. This amount can be increased by an Order in Council.

The Governor-General can make an Order in Council to increase the $3,000,000 limit. This Order is considered secondary legislation, which means it has to follow special rules about how it’s published.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514313.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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EB 12: Valuing closing stock consistently, or

“Consistent method for valuing end-of-year stock”

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EB 14: Low-turnover valuation methods, or

“Ways to value inventory for low-turnover traders”

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

EB 13Low-turnover valuation

  1. A person who is a low-turnover trader may value closing stock—

  2. by a standard valuation method, as described in sections EB 6 to EB 12; or
    1. by a low-turnover valuation method, as described in sections EB 14 to EB 22; or
      1. as low value trading stock, in the circumstances described in section EB 23.

        1. In this subpart, low-turnover trader means a person who carries on a business when, in an income year, the total of the turnover of the business and the turnover of associated persons, as defined in sections YB 2 and YB 3 (which contain definitions of associated persons), is no more than the greater of—

        2. $3,000,000; and
          1. the sum specified by the Governor-General by Order in Council.

            1. The Governor-General may make an Order in Council increasing the sum specified in subsection (2)(a).

            2. An Order in Council under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

            Compare
            Notes
            • Section EB 13(2): amended, on (applying for the 2010–11 and later income years), by section 113(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
            • Section EB 13(4) heading: inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
            • Section EB 13(4): inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).