I’m in Australia and the tax rules here state that any stock (including livestock) that are taken for private use must be accounted for as if they had been sold.
We processed an animal for our own use. It was bred on our farm. I initially did a journal to credit ‘Inventory on hand’ and debit ‘Drawings’, but this does not alter Income. I presume the cost should end up in ‘Inventory - Sales’.
Does anyone know how I should handle this? Thankyou.
On second thoughts, maybe I need to set up a separate income account called ‘Livestock - private use’ or something like that.
I’m not sure that they meant to book them as income. I assume that they meant to apply sales tax at the going sales price.
But you will have to confirm this with your accountant, of course.
Yes, as income:
But I think I’ve found the best way. I made out an invoice to us personally, then paid it with the ‘Owner’s Funds’ bank account. This reduced the inventory and added the amount to Income.
That will will work but you can invoice it at cost.
Trading stock
You can choose to value trading stock at cost, market-selling value or replacement value. It is important to maintain up to date records showing how you value your stock. This is so you can report any profits or losses correctly because there are many concessions available to primary producers. These include:
- Wool growers that defer profits on the sale of a wool clip from an advanced shearing caused by drought, fire or flood
- insurance recoveries for loss of livestock may be included in assessable income in equal instalments over five years
- Profit from forced disposal or death of livestock may be spread over five years (ten years if the forced disposal was for the control of bovine tuberculosis).
Stock killed for rations or exchanged for goods and services will be treated as if you disposed of the stock at cost.
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