The importance of taking stock at year-end

Tax requirement

Section 22 of the Income Tax Act requires that a taxpayer values the trading stock held at the end of the year of assessment. This value has to be calculated at cost price and any reduction of this value is subject to the discretion of the Commissioner.

Business requirement

The actual value of the trading stock is vital for any business, in order to calculate the profitability of the business. To trade profitably stock has to be marked-up at an applicable percentage and this percentage must be checked when stock is calculated and the gross profit is determined. A lower than expected gross profit percentage can be indicative of theft, excessive discounting, bad buying, etc.

Continuous stock records are by far the best way of controlling your business and that by ensuring regular monitoring and checking, the business can be profitable and properly managed.

Be careful

Make sure that cut-off procedures are properly considered. In other words, stock should only be counted if the corresponding liability is included in the creditors balance at year-end, and vice versa. Similarly stock should not be counted if the sale has already been reflected at year-end, and vice versa.

Proper control of stock is essential to ensure a profitable business.  





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IC Marais

Professional experience:

IC Marais is a certified CA (SA) with public sector and private sector technical knowledge based on 5 years’ Public Sector accounting, auditing and financial management experience and 5 years audit, tax and accounting experience. Detailed knowledge of private and public sector accounting and auditing standards (GRAP, IPSAS, IFRS, IAS, ISA) and public sector financial legislation (MFMA, etc.)

He enjoys the outdoors, hunting and fishing.


Professional experience:

In 1995, Schalk started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and then Mazars Moores Rowland in 2007) in Bloemfontein. In 1998, Schalk was appointed as manager at Moores Rowland, where he became a partner in 2003. Schalk received his Postgraduate Certificate in Advanced Taxation in 2006 and in 2009 he received his Certificate in the Administration of Estates.


Professional experience:

Cedric started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and Mazars Moores Rowland in 2007), Bloemfontein, in 1986. After completion of his articles, he joined the Special Investigations Division of the Department of Finance (SA Revenue Services) as a senior inspector from 1990 to 1991.


Professional experience:

Lucha started her career as a tax inspector at the Inland Revenue Department of New Zealand. After this she worked in commerce in Canada, Mexico and the United States.

On her return to South Africa, she completed her CA training contract with us and has been with Newtons ever since. She became a Partner in 2012.

Apart from her CA(SA) qualification she also holds a postgraduate certificate in Advanced Taxation (2005) and has the overall responsibility for training as our Training Officer.