Pre 31 March Reminders #2
This is the second of the posts for preparation of the end of the financial year on 31 March (11 days to go)..
click here to review the Pre 31 March Reminders #1
Stock
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:
- 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
- different valuation methods can be used for different stock items
- 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.
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, and 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.
ACTION POINTS
- Plan for a stock take if you are required to undertake once
- Ensure all work/jobs that can be invoiced at 31 March is and then document any WIP.