Hi scenic, As you have stated your opening stock was $0 and your closing stock is well over $5,000 you will need to do a stocktake.

To simplify things for small business' the ATO no longer require you to do a stocktake if your closing stock figure has varied by less than $5,000, but once it exceeds that amount, as in your case you will need to do one.

The significance of doing a stock take is not only to determine the value of your stock, but to generally work out the cost of goods sold ie. how much the stock you sold thoughout the year cost you. For those that can't determine this figure easily from their accounting system, it can be calculated as follows:

Cost of Goods Sold = Opening Stock + Purchases - Closing Stock

If for example you claimed to have stock valued at $0 at the start of the year, the assumption would be that you sold everything you had on hand last year and therefore claimed all of your stock purchases as an expense. As such you can't claim those purchases as an expense again this year or in future years.

When you purchase stock it remains as an asset until such time you sell the item. As soon as an item of stock is sold it becomes an expense (cost of goods sold).