Posted on October 21, 2014 by GSCPA Admin
What is trading stock?
Trading stock includes anything you produce, manufacture, acquire or purchase for manufacture, sale or exchange.
What isn’t considered to be trading stock?
Stocks of spare parts held for repairs and maintenance, goods acquired to be hired out to customers and consumables used in manufacturing trading stock such as cleaning agents.
Standing or growing crops, timber or fruit are not considered to be trading stock either. They become trading stock when they are harvested, felled or picked.
How do I value my trading stock?
There are several ways that you can value your trading stock.
The most commonly used method is cost. This means that the stock is valued at the price paid . The cost of the trading stock also includes expenses incurred getting the stock to its existing condition such as freight, handling charges and cost of labour.
Using the market selling value is another method. This is the value from a sale or sales in the ordinary course of the taxpayers business. For a retailer, it would be the current retail value. For a wholesaler, it would be the current wholesale value.
The replacement value method is another way you can value your trading stock. This is the price at which trading stock can be replaced by the taxpayer buying a comparable item in the market. To use the replacement value method, the items must be available in the market and be substantially identical to the replaced items.
What happens if my stock becomes obsolete?
If your stock becomes obsolete, you can elect to write down the stock to a lower value, providing it is still reasonable.
For stock to be considered obsolete it must be out of use, out of date, unfashionable or outmoded. You must be able to show that there is no reasonable prospect of future sales of the stock.
You can decide to either make a once-off write-down or a progressive write-down of the value of the obsolete stock, although a progressive write-down is more commonly used and preferred. Obsolete stock which remains on hand should generally by valued at its scrap value.
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Posted on August 10, 2014 by GSCPA Admin
There are a number of changes that have come into effect for the new financial year regarding contribution caps, excess contributions, superannuation guarantee increases, government co-contributions and super contributions tax rebates for low income earners.
It’s important that you are aware of how these might affect you.
Contribution Caps
Outlined below are the current year contribution caps for the period 1/7/14 – 30/6/15:
Concessional Contributions Cap
(Employer or self employed contributions including salary sacrifice amounts)
$30,000 (up to age 49 at 30/06/2014)
$35,000 (Age 49+ at 30/06/2014)
Non-concessional Contributions Cap
$180,000 or $540,000 over 3 years
Please be aware if you are over 65 years of age you need to meet the work test to qualify to contribute to super. There are also restrictions on using the 3 year bring forward provisions for those 65 years and over. Please contact our office if this is something you are considering, to ensure you do not exceed the limits.
Excess Concessional Contribution
From 2013-14 and later years, excess concessional contributions are included in an individual’s taxable income (with a non-refundable tax offset equal to the 15% tax paid by the fund).
Should you receive an excess contribution assessment, you will have the option of paying the excess contribution tax personally or through the super fund.
Any concessional contributions in excess of the cap will count towards your non-concessional contributions cap.
Excess Non Concessional Contribution
The Government has announced that an individual with contributions in excess of their non-concessional contributions cap will be allowed to withdraw those excess contributions and associated earnings. As a result, individuals will not be subject to the excess non-concessional contributions tax but will be taxed on these contributions at their marginal rate. This measure will bring in line the treatment of excess non-concessional contributions with that of excess concessional contributions.
This measure will apply retrospectively to excess non-concessional contributions made from 1 July 2013.
Superannuation Guarantee Increases
It is proposed to freeze the Super Guarantee (SG) rate at 9.5% from 1 July 2014 until 30 June 2018 when it will increase by 0.5% each year until it reaches 12% on 1 July 2023 as follows:
Financial Year SCG percentage proposed
1 July 2014 – 30 June 2018 9.5%
1 July 2018 – 30 June 2019 10.0%
1 July 2019 – 30 June 2020 10.5%
1 July 2020 – 30 June 2021 11.0%
1 July 2021 – 30 June 2022 11.5%
1 July 2022 – 30 June 2023 12.0%
Superannuation Government Co-Contributions
From 1 July 2014 the higher income threshold against which the co-contribution is assessed has been increased from $46,920 to $48,516 and the lower income threshold has been increased from $31,920 to $33,516.
Super Contributions Tax Rebate for Low-Income Earners
The low income super contribution (LISC) is a government super payment of up to $500 per financial year to help low income earners. The LISC is 15% of the concessional contributions you or your employer makes from 1 July 2012. For example should you qualify and concessional contributions of $3,000 are made into your superannuation fund, the Tax Office will pay $450 into your super fund. The maximum payment you can receive for a financial year is $500.
The Australian Taxation Office will use the information on your income tax return to work out your eligibility for the LISC. If you do not lodge an income tax return, the Taxation Office will work out eligibility using other information collected.
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