Taxation Determination

TD 2022/15

Income tax: value of goods taken from stock for private use for the 2022-23 income year

• Please note that the PDF version is the authorised version of this ruling.

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 (the 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 2022-23 income year is:

Table 1: Values of goods

Date of effect

3. This Determination applies to the 2022-23 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 Public Rulings).

Commissioner of Taxation
19 October 2022

Appendix - 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 this Determination. 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 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. Industries included in the Schedule are:

Table 2: Industries

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 2-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 industries listed in the Schedule in this Determination. The stock items are generally limited to the HES 'food and non-alcoholic beverage' broad category, except for Restaurants/cafés (licensed) 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 in this Determination 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 in this Determination at the commencement of each income year.

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References

ATO references:
NO 1-VAI5LHW

Previous Rulings/Determinations:
TD 2018/10
TD 2019/2
TD 2020/1
TD 2021/1
TD 2021/8

Related Rulings/Determinations:

TR 96/7
TR 2006/10

Business Line:  SMB

Legislative References:
ITAA 1936 262A

Other References:
PS LA 2004/3 (GA)