Australian retailers must undertake a stocktake as close as possible to the end of each income year, which ends 30 June. Small businesses can skip the formal count under the simplified trading stock rules if the value of their stock changed by $5,000 or less.
That is the tax obligation. The operational case is bigger. A well-planned stocktake tells you what you actually have, what is not selling, where the margin is going, and which product records need fixing — answers that keep paying off long after the return is lodged.
This guide covers what the ATO requires, how to prepare, and a ten-point checklist you can work through with your team. It applies to grocery, fuel, liquor, bakery, butcher, seafood and multi-store retailers.
STOCKTAKE AT A GLANCE
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30 June
End of the Australian income year
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$5,000
Stock value change at or below which a formal stocktake may not be required
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3
Approved methods for valuing trading stock
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5 years
How long stocktake records must be kept
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Work through these before the first count begins. Each step is explained in detail further down.
Tax requirements in this article were verified against the Australian Taxation Office and business.gov.au in August 2026. This is general information, not tax advice — confirm your obligations with your accountant or registered tax agent.
It depends on how much the value of your trading stock has moved over the year, and on your aggregated turnover. The ATO states: “You are required to undertake a stocktake as close as possible to the end of each income year.” Two sets of rules then determine what that means for you.
| General trading stock rules | Simplified trading stock rules | |
|---|---|---|
| Applies when | Stock value changed by more than $5,000, or you choose to count anyway | You estimate stock value changed by $5,000 or less |
| Turnover test | No turnover test | Aggregated turnover under $10 million, or between $10m and under $50 million for income years starting on or after 1 July 2021 |
| What you must do | Do an end-of-year stocktake and record stock value at the beginning and end of the income year | No formal stocktake required, and no need to account for the change in value |
| Closing value | Actual counted and valued stock | Treated as the same as the opening value |
If you rely on the simplified rules, the estimate still has to stand up. The ATO expects you to undertake it “in good faith following a rational process” and to be able to explain and prove that process if asked. Relevant factors include how you store and value stock, your purchase and sales records, and — directly to the point for retailers — “your inventory systems and how accurate they are”.
That is worth sitting with. Under the simplified rules, the quality of your point-of-sale and back-office data is not just an operational convenience. It is part of what makes your estimate defensible.
The ATO allows three methods, and you can choose a different method each year for different items of stock:
Two things retailers regularly get caught by. The closing value of an item at the end of one income year automatically becomes its opening value at the start of the next. And if you are entitled to GST credits, you generally exclude the GST component when calculating stock value.
A smoother stocktake starts before anyone picks up a scanner. Review your product file for accurate descriptions, barcodes, departments, supplier links, pack sizes, cost information and retail pricing.
A small product file issue slows the whole count. An incorrect barcode, an outdated description or an inactive line creates a decision point for a staff member standing in an aisle at 6am — and every one of those decisions is a chance for an error to enter your data. Clean product data reduces rework once counting finishes.
Slow-moving stock quietly costs you cash flow, shelf space and margin. Reviewing it before the count gives your team time to act rather than simply record the problem. You may need to:
business.gov.au also suggests running a stocktake sale to lower stock levels before you count, noting benefits including higher sales, improved customer satisfaction, and selling inventory before it goes out of season or out of date. For fresh-food departments, bakeries, butchers and seafood retailers, that last point is not a nice-to-have — slow-moving stock in those departments becomes waste.
A no-scan report identifies products that have not moved through the point of sale as expected. A no-scan line may point to a barcode issue, a ranging problem, an incorrect stock record, damaged stock, poor placement, or simply low demand.
Reviewing no-scan items before the stocktake lets your team fix the cause rather than record the symptom. In high-volume retail, these issues hide easily inside daily trade — the stocktake is often the first time anyone notices, which is too late to do anything but write it down.
Supplier invoices sit upstream of stock accuracy, costing and margin. A missed cost change or invoice variance flows straight into pricing and reporting, and it will not announce itself.
With EM Invoicing, supplier invoices can be emailed or scanned and imported into EM Cloud™, where your team can match them against received quantities and costing. EM Cloud™ helps you review:
A product can sell well and still lose you money. If supplier costs have risen and nobody has revisited the retail price, that line is quietly delivering less than you think. Stock discrepancies compound the problem by making margin reporting harder to trust in the first place.
Stock control, invoice visibility and margin management are not three separate jobs. They are one job viewed from three angles.
business.gov.au sets out seven practical steps for conducting a stocktake:
On top of that, your team should know:
Brief them early. Last-minute training during an already busy period is how avoidable errors get into your numbers.
If your business is required to do a stocktake, the ATO requires records showing:
Note that last one. It is not enough to record who counted — you also need who valued the stock and on what basis. Most records must be kept for five years, starting from when you prepared or obtained the record or completed the relevant transactions, whichever is later. Records must not be altered, must be in English or easily convertible to English, and must be produced if the ATO asks.
EM Cloud™ is the GaP Solutions cloud back-office and head-office system, managing point-of-sale, stock control, invoicing, reporting and pricing in one place. During stocktake season it gives your team visibility into product data, stock movements and the back-office processes that feed them.
For grocery, fuel, liquor, bakery, butcher, seafood and multi-store retailers, that turns stocktake from an isolated annual event into part of an ongoing stock control process — which is exactly the position you want to be in when the count comes around.
Count once.
Trust the number all year.
As close as possible to the end of each income year, which ends on 30 June. The general trading stock rules require you to record the value of all trading stock on hand at both the beginning and the end of the income year.
Not always. Under the simplified trading stock rules, a business with aggregated turnover under $10 million — or between $10 million and under $50 million for income years starting on or after 1 July 2021 — does not have to conduct a formal stocktake if it reasonably estimates the value of its trading stock changed by $5,000 or less during the year. The closing value is then treated as the same as the opening value.
Using one of three ATO-approved methods: cost price, market selling value, or replacement value. You can choose a different method each year for different items of stock. Where you are entitled to GST credits, exclude the GST component from the value.
Five years, starting from when you prepared or obtained the record or completed the relevant transactions, whichever is later. The records must show a list describing each article of stock and its value, who did the stocktake, how and when it was done, and who valued the stock and on what basis.
No. Under the general trading stock rules a stocktake usually involves physically counting stock and valuing each item. Good point-of-sale and back-office data makes the count faster and more accurate, and the ATO expressly lists “your inventory systems and how accurate they are” as a factor when estimating stock value under the simplified rules — but system data supports the process rather than replacing the count. Check your position with your tax agent.
Clean the product file, verify barcodes, review inactive lines, investigate slow-moving and no-scan products, reconcile supplier invoices and cost changes, check margin impact, test the stocktake devices, and brief the team on areas, exceptions and sign-off. Doing this in the weeks beforehand rather than the night before is the difference between a count that confirms your data and one that exposes it.
Talk to GaP Solutions about EM Cloud™ stock control, EM Invoicing and the reporting tools that give your team better visibility long before 30 June.
CONTACT GaP SOLUTIONS