INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 2 - Income  

Subdivision B - Trading Stock  

SECTION 31   VALUE AT END OF YEAR OF INCOME  

31(1A)   [No application 1997/98 income year onwards]  

This section does not apply to the valuation of trading stock at the end of the 1997-98 year of income or at the end of a later year of income.

Note:

Section 70-45 (Value of trading stock at end of income year) of the Income Tax Assessment Act 1997 deals with the valuation of trading stock at the end of those years of income. Section 70-70 (Valuing interests in FIFs) of that Act provides special rules for valuing interests in FIFs for those years of income.

31(1)   [Taxpayer's option]  

Subject to this section, the value of each article of trading stock (not being live stock) to be taken into account at the end of the year of income shall be, at the option of the taxpayer, its cost price or market selling value or the price at which it can be replaced.

31(2)   [Value in special circumstances or obsolescence]  

Where the Commissioner is satisfied, in relation to any trading stock of a taxpayer, that, by reason of obsolescence of, or any other special circumstances relating to, the trading stock, the value of the trading stock to be taken into account at the end of the year of income should be an amount, being less than the amount that is the lowest value that could be applicable under subsection (1), determined by the Commissioner to be the fair and reasonable value of the trading stock having regard to -

(a) the quantity of the trading stock on hand at the end of the year of income;

(b) the quantity of the trading stock sold, exchanged or used in manufacture by the taxpayer after the end of the year of income and the prospects of sale, exchange or use in manufacture of further quantities of that trading stock;

(c) the quantity of trading stock of the same kind sold, exchanged or used in manufacture by the taxpayer during the year of income and preceding years of income; and

(d) such other matters as the Commissioner considers relevant,

the value of the trading stock to be so taken into account shall, notwithstanding any exercise of the option of the taxpayer under that subsection, be the value so determined by the Commissioner.

31(3)   [Notice in writing, etc]  

Subsection (2) does not apply in relation to a taxpayer unless, by written notice signed by or on behalf of the taxpayer and lodged with the Commissioner on or before the last day for the furnishing of the return of income of the taxpayer for the year of income, or within such further time as the Commissioner allows, the taxpayer notifies the Commissioner that he wishes that subsection to apply.

31(4)   [Value of trading stock FIF interest]  

Subject to the following provisions of this section, the value to be taken into account at the end of the 1991-92 year of income, and at the end of each later year of income, of an article of trading stock that consists of an interest in a FIF is to be its cost price.

31(5)   [Taxpayer's election]  

Subject to subsection (6), if the taxpayer elects that this subsection is to apply to the taxpayer in relation to all the taxpayer's interests in FIFs, the value to be taken into account at the end of the year of income of every article of trading stock that is an interest in a FIF is to be its market value.

31(6)   [Conditions to election]  

Subsection (5) does not apply to the taxpayer unless the election is made before the taxpayer furnishes a return in respect of income of the first year of income in which any notional accounting period of a FIF in which the taxpayer has an interest ends but, if the election is so made, that subsection applies to the taxpayer in respect of that first year of income and in respect of all later years of income.

31(7)   [Value of trading stock at start of year more or less than cost]  

If:

(a) subsection (4) would, apart from this subsection, apply to the taxpayer in respect of the 1991-92 year of income; and

(b) an article of trading stock was on hand at the beginning of that year of income; and

(c) the value of that article of trading stock that was taken into account at the beginning of that year of income was greater or less than its cost price;

then:

(d) subsection (4) does not apply in relation to that article of trading stock; and

(e) the value of that article of trading stock that is to be taken into account at the end of that year of income, or at the end of any later year of income to which subsection (5) does not apply, is the value referred to in paragraph (c) of this subsection.

31(8)   [``FIF'', ``notional accounting period'']  

In this section:

"FIF"
has the same meaning as in Part XI;

"notional accounting period"
, in relation to a FIF, has the same meaning as in Part XI.