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Income Tax Act 2007

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

EB 18: Costs: other stock of low-turnover traders

You could also call this:

“How low-turnover traders calculate the cost of purchased closing stock”

If you are a low-turnover trader, this section tells you how to work out the cost of your closing stock. It applies when you buy trading stock, rather than make it yourself, and you choose to value your closing stock at cost.

When you’re figuring out the value of your closing stock, you need to include two main things:

  1. The cost of buying the stock (this is called the acquisition cost).

  2. Any money you spent on transport and insurance to get the stock to where you need it and in the condition you need it.

These rules help make sure you’re including all the important costs when you’re working out the value of your stock at the end of the year.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514324.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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EB 17: Costs: manufactured or produced stock of low-turnover traders, or

“How low-turnover traders should value their manufactured stock”

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EB 19: Discounted selling price for low-turnover traders, or

“How low-turnover traders can calculate stock value using discounted selling prices”

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

EB 18Costs: other stock of low-turnover traders

  1. This section applies when a low-turnover trader—

  2. acquires trading stock other than by manufacture or production; and
    1. determines the value of their closing stock at cost.

      1. In determining the value of their closing stock, the low-turnover trader must include the following costs:

      2. the acquisition cost; and
        1. any direct transport and insurance costs that they incur in bringing the stock to the place and condition in which they have it.

          Compare
          Notes
          • Section EB 18(2)(a): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).