Section EB 19 — Income Tax Act 2007: Discounted selling price for low-turnover traders

EB 19 Discounted selling price for low-turnover traders Financial statements prepared (1) A low-turnover trader who prepares financial statements may determine the value of their closing stock at its discounted selling price if they use discounted selling price for their trading stock in their financial statements. Financial statements not prepared (2) A low-turnover trader who does not prepare financial statements may determine the value of their closing stock at its discounted selling price. Retailers with turnover of more than $1,000,000 (3) If the low-turnover trader is a retailer whose turnover is more than $1,000,000, the discounted selling price for each department or category of goods is the total of the retail selling prices of the goods minus the normal gross profit margin for the department or category of goods. Normal gross profit margin for purposes of subsection (3) (4) For the purposes of subsection (3), the low-turnover trader must— (a) calculate the normal gross profit margin for the department or category of goods under NZIAS 2 or an equivalent standard issued in its place; and (b) calculate the normal gross profit margin for each income year for each department or category of goods; and (c) include all costs that sections EB 16 to EB 18 require to be included. Not retailers (5) If the low-turnover trader is not a retailer, the discounted selling price for each category of goods is the total market selling value of the goods minus the normal gross profit margin for the category of goods. Normal gross profit margin for purposes of subsection (5) (6) For the purposes of subsection (5), the low-turnover trader must— (a) calculate the normal gross profit margin for each income year for each category of goods; and (b) include all costs that sections EB 16 to EB 18 require to be included. Defined in this Act: closing stock , cost , financial statements , income year , low-turnover trader , NZIAS 2 , trading stock , turnover , Compare: 2004 No 35 s EB 19 Section EB 19(4)(a): amended, on 1 April 2008, by section 352(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section EB 19 list of defined terms NZIAS 2 : inserted, on 1 April 2008, by section 352(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).