Hi ddzx, You've help me before with some tax questions at the...

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04/09/18

13:29

Post #: 35402702
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Originally posted by ddzx ↑

marking down 'Closing Stock' at 30 June only applies if you are 'Trader' ('Business') for tax purposes

say at 30 June 2018, your Closing Stock included 300,000 AVZ shares bought at 3 cents and 200,000 AVZ shares bought at 25 cents each.

at 30 June 2018, the closing (market) price of AVZ was 10.5 cents

to minimize your taxable income, you value your 300,000 AVZ shares at 3 cents each (cost price) and you value your other 200,000 AVZ shares at 10.5 cents each (market price). this lowers your taxable income.

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however, as I warned, this potentially gives rise to a larger tax bill the next year if you have a bad year next year

for example, i just lodged my tax return for FY2018 (to get a refund on PAYG instalments paid for Sept 17, Dec 17 and March 18 quarters). i got hammered in the 2nd half of FY18, losing much profit i made in the 1st half. 40% of the taxable income i lodged for FY2018 was the closing stock i marked down at 30 June 2017

40% of the tax i must pay for 2018 is from profit made in 2017

regards
held

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Hi ddzx,
You've help me before with some tax questions at the beginning of the year, now the time has come and I'm working on my return. I've been reading your posts about stock valuation (I will lodge the return as a trader) but there's still something not clear although I'm sure it's been discussed somewhere.
Should the brokerage be included in the sales and purchases? or does this make part of other expenses?
Thanks
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