How do I account for trading stock obsolescence in my tax return as a sole trader? Also do I show this in cost of sales or is there a seperate section in the tax return for this
opening stock - 100 units
purchases - 0
closing stock - 100 units
cost of a unit = $70
market value of a unit = $100
50 units of closing stock are obsolete
thanks
Hi @gt001,
If you're a small business have a look at the simplified trading stock rules. These'll help you with your calculations. If you're doing a stocktake then you'll use the general trading stock rules.
When it comes time to lodge your tax return, at section P21 Trading stock election, you'll let us know the value.
You might also want to have a look at TR 93/23.
If the stock is really obsolete, then the market value would be less than the other stock.
Substitute a reasonable market value, or just throw it out.
@bruce4Tax - with the scenario I've provided does it not make sense to go with cost as opposed to market value. Opening stock $7000 + purchases $0 - stock write-off @ market $5000 = closing stock of $2000 and a deduction of $5000 vs opening stock $7000 + purchase $0 - stock write-off @ cost $3500 = closing stock of $3500 and a deduction of $3500 thanks
Hi @gt001,
If you're a small business have a look at the simplified trading stock rules. These'll help you with your calculations. If you're doing a stocktake then you'll use the general trading stock rules.
When it comes time to lodge your tax return, at section P21 Trading stock election, you'll let us know the value.
You might also want to have a look at TR 93/23.
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