Is freight cost of sales or expense

Leanne7
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Is freight cost of sales or expense

Can anyone help me with this question please. Is freight cost of sales or expense

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Leanne7
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Re: Can anyone help me with this question please. Is freight cost of sales or expense

Let me expand on that question.

We are sheep farmers, so my question is... when we buy in ewes etc is the freight cost of sales or expense.

Same question for when we sell lambs... is the freight cost of sales or expense.

Super Partner Kym__Yeoward
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Re: Can anyone help me with this question please. Is freight cost of sales or expense

It depends on what the freight paid for, was for.

 

If it was for obtaining goods to sell, or livestock (such as importing or delivering them into store, or onto a farm), it forms part of the cost of sales. For example, COS - Freight on Purchases (If just from within Australia or New Zealand, use tax code GST - if from overseas, you will need to see the breakdown on the customs agent's statement (as the freight from overseas to the entry port  will be GST free, but that from the entry porft to your premises will have GST).

 

If it was instead for equipment or items purchased, that were not for resale (e.g. delivery fees for stationery), it will be an expense - e.g. Freight Expense (usually tax code GST - but for imports, see the papragraph above)

 

Note that freight on equipment items costing more that $19,999 will usually be capitalised, as part of the asset's cost. Ask your accountant about this. For small businesses (i.e. those with an annual turnover under $10m.) equipment or vehicles costing $19,999 or less, including freight, can be claimed as an instant expense write-off, for tax purposes (Australia only) - so they they can be expensed to 6-xxxx "Equipment under $20,000".

 

If you charge freight on your sales, it will go to an Income account - e.g. 4-xxxx "Sales income - Freight" (tax code GST).

 

Kym Y

Darwin (Palmerston) NT

 

 

Ultimate Partner Seattle
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Re: Can anyone help me with this question please. Is freight cost of sales or expense

@Leanne7 @Kym__Yeoward

 

Leanne,

 

Hope you are happy with Kym's answer.

 

I would put freight on Sheep as a Cost of Sales.

You may like two freight ledgers - Freight on Sheep Purchased and Freight on Sheep Sold.

 

Duncan

Duncan Smith
Business Advice + Tax
www.businessadviceplustax.com.au
Helping business owners build a better business since 1998
E expressgst@optusnet.com.au T 02 9904 3672 7 days
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