It is not uncommon for business owners to use or take goods from their business for private use, but did you know that you must make an allowance for these goods taken in your annual financial statements and tax return?
To avoid having to keep detailed records, each year the Australian Taxation Office (ATO) issue a Taxation Determination (TD) setting out an acceptable dollar value of goods taken from trading stock for own use by business owners (or their associates).
The TD is only relevant for certain industries and for businesses operating as a sole trader or partnership. Of course you can always use a lesser amount than referred to in the TD, but you need to be able to justify the lower amount to the Commissioner of Taxation.
You can find the TD for 2014/15 here.
The purpose of including these amounts is to record income in lieu of the sales value you have forgone, note that a GST adjustment will need to be made also…
The TD is not applicable to businesses operating as a company or trust, in these cases the business owner will need to consider the application of Fringe Benefits Tax (FBT).
If you need help applying these measure, contact me for assistance.