end of yearEOY

Pre 31 March Reminders #2

This is the second post in preparation of the end of the financial year on 31 March ..

If as part of your business, you carry stock, you will need to conduct a stock-take on 31 March and this needs to be recorded.
Some key points with stock:

  1. the value that you use per item may reduce your tax. The values that you can use are the lower of cost price or market value (excl GST if GST registered), with market value needing to be substantiated by evidence if used
  2. different valuation methods can be used for different stock items
  3. any obsolete stock needs to be physically disposed of before 31 March

If you can reasonably estimate that your stock on hand is below $10,000 at 31 March, you do not need to do a stock take. However we recommend that you actual do a stocktake as best practice to prove that it was under the $10,000 threshold.

Work in Progress (WIP)
For those of you that are in a service industry or in a trade, you are likely to have work (jobs) in progress at 31 March. This needs to be valued and accounted for if, BUT only if you have the “right to invoice” the customer at 31 March but haven’t. The “right to invoice” is established either by the terms of trade or contract  terms OR your normal invoicing procedures.
To value WIP, it is based on cost – cost price of the materials and cost price of labour.

  1. Plan for a stock take if you are required to do one.
  2. Ensure all work/jobs that can be invoiced at 31 March are and then make a list of any WIP with the cost.