Small Business TaxesCan someone explain what it wants when entering the value of opening inventory value, total purchase during the year, and closing inventory value

As per CRA, you can enter your opening inventory amount at line 8300 and your closing inventory amount at line 8500 of your T2125. These amounts must include raw materials, goods in process and finished goods. The way you value your inventory is important in determining your income. 

For income tax purposes, choose one of the following two methods:

• value your entire inventory at its fair market value (FMV). Use the price you would pay to replace the item or the amount you would get if you sold the item
   
• value individual items in your inventory at either their FMV or their cost, whichever is less. Cost is the price you incur for an item. Cost also includes any expenses you incur to bring the item to the business location and put it in a condition so that you can use it in the business. When you cannot easily tell one item from another, you can value the items as a group.

For further information you can refer to the Self-employed Business page on the CRA website, Line 8300 – Opening inventory and Line 8500 – Closing inventory.

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