How to use inventory to maximise your tax benefits
You can use inventory to reduce your business income tax by writing-off obsolete or damaged stock to maximise your tax benefits.
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Using Inventory to Reduce your Taxable Income and Maximize your Tax Benefits
The starting and ending position of your stock is used as part of calculating the cost of goods sold, to determine your taxable profit. Unsold or obsolete inventory is an asset on your balance sheet and can be used as a reduction of your gross receipts. This means that inventory can decrease your ‘taxable income’ and, dependent on the status of the stock, can entitle your business to a tax deduction.
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Are your bad debts costing you extra tax? Here’s what to do…
The starting and ending position of your stock is used as part of calculating the cost of goods sold, to determine your taxable profit. Unsold or obsolete inventory is an asset on your balance sheet and can be used as a reduction of your gross receipts. This means that inventory can decrease your ‘taxable income’ and, dependent on the status of the stock, can entitle your business to a tax deduction.
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Mark Semmens
Mark is a Chartered Accountant with a wealth of experience in accounting and taxation. Mark is a Member of Chartered Accountants Australia and New Zealand, the Tax Practitioners Board and the National Tax and Accountants Association.
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Daniela Semmens
Daniela Semmens is a Co-Director of Semmens & Co. and joined the company as General Manager in 2017. Daniela is an Affiliate Member of Chartered Accountants Australia and New Zealand and also a Member of the Australian Institute of Project Management.
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