Taxation Determination

TD 2014/2

Income tax: value of goods taken from stock for private use for the 2013-14 income year

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Preamble

Ruling

1. This Determination provides an update of amounts that the Commissioner will accept as estimates of the value of goods taken from trading stock for private use by taxpayers in named industries. The updated amounts are contained in the Schedule for the value of goods taken from trading stock (Schedule) at paragraph 2 of this Determination.

Schedule for the value of goods taken from trading stock

2. The Schedule for the value of goods taken from trading stock for private use in the 2013-14 income year is:

Date of effect

3. This Determination applies to the 2013-14 income year. However, this Determination will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).

Commissioner of Taxation
19 March 2014

Appendix 1 - Explanation

Explanation

4. In the context of self assessment, each taxpayer should be able to demonstrate that the value attributed to goods taken from stock for private use was fair and reasonable. Taxpayers should always have regard to their own circumstances when determining the appropriate value.

5. The Commissioner has previously issued 'goods own use' (GOU) amounts for a range of industries in recognition of the fact that in many cases it is difficult for accurate records to be kept of transactions involving goods taken from stock for private use. These amounts are estimates of the value of goods taken from trading stock for private use by taxpayers in named industries.

6. It is also recognised that greater or lesser values may be appropriate in particular cases. Taxpayers may be able to justify a lower value for goods taken from stock than that shown in the Schedule. In that case the lower amount should be used. Where the value of goods ex-stock would be significantly greater, the actual amount should be used.

Methodology

Selection of industries

7. Industries suitable for inclusion in the Schedule of Industries should:

•

exhibit a transformation process of trading stock items (for example baking);

•

have as trading stock a range of small items or ingredients, usually of low value;

•

not be suited to inventory systems; and

•

have a high turnover of items, often for cash.

8. The Schedule of Industries is:

Determination of amounts

9. The basis for determining values of goods taken from trading stock is derived from the latest^[1] Household Expenditure Survey (HES) results issued by the Australian Bureau of Statistics (ABS) adjusted for Consumer Price Index (CPI) movements for each category of items.^[2] The ABS collects at varying intervals detailed information about the expenditure, income, net worth and other characteristics of households resident in private dwellings throughout Australia. Information is collected during personal interviews and from diaries in which survey participants have recorded all personal expenditure over a two week period. Interviews and diary-keeping are spread over the financial year of collection. At the 'fine' level of expenditure, the survey details household expenditure in over 700 categories of items across a range of household composition groups.^[3] It is considered that these survey results provide reasonable and statistically valid estimates as to the community's level of spending on a wide range of items.

10. Using the HES data, consideration has been given to the fine level expenditure items and which items would be present in the trading stock of the Schedule of Industries. The stock items are generally limited to the HES 'food and non-alcoholic beverage' broad category, except for Licensed Restaurants/Cafes where 'alcoholic beverage' items are included,^[4] and Caterer where some 'household equipment' items are included.

11. The main assumption in calculating GOU amounts is that if a business has an item in stock then the taxpayer would take the item from stock for own use rather than purchase the item elsewhere. However, the GOU amounts represent amounts that the Commissioner deems acceptable. Where a taxpayer considers the values provided in the Schedule do not reflect their particular circumstances, they may elect to maintain suitable records^[5] of items taken from trading stock for personal use.

Updating the Schedule

12. It is intended to adjust the values annually to reflect either the most recent HES data or the HES data uplifted for CPI movements and reissue the Schedule at the commencement of each income year.

Not previously issued as a draft

References

ATO references:
NO 1-5A349PG

Previous Rulings/Determinations:
TD 2001/25
TD 2002/26
TD 2003/22
TD 2004/38
TD 2005/36
TD 2006/55
TD 2007/30
TD 2008/32
TD 2009/22
TD 2011/11
TD 2012/20
TD 2013/3

Related Rulings/Determinations:

TR 96/7
TR 2006/10

Subject References:
accounting & record keeping
trading stock

Legislative References:
ITAA 1936 262A
TAA 1953

Other References:
Law Administration Practice Statement PS LA 2004/3 (GA)