Why you need to value bees
Most businesses with trading stock must calculate the difference between the opening value of their trading stock and the closing value of their trading stock and include this amount in their income tax return.
In a simple retailing example, if a business opens the year with $10,000 of stock and closes the year with $20,000 of stock, they have spent a net $10,000 on purchasing stock and this amount is included in their assessable income for the year.
Livestock is a form of trading stock and bees are considered livestock.
Exceptions
An exception applies if you are a small business entity: generally, this is a business with a turnover of less than $2 million per year. In this case, you don't need to account for differences in trading stock if the difference is $5,000 or less.
You can use a simplified practice of valuing a 'live hive' rather than accounting for the individual bees.
There are several methods outlined in Law Administration Practice Statement PS LA 2008/4 (GA), but the simplest one you may be able to use is the average industry cost of $9 per live hive. So, if you had 500 live hives the value of your trading stock under this method would be $4,500.
This means that if you are a small business entity with 500 hives or fewer, you do not need to value your trading stock.
If you know that the value of a queen bee you use in your hives is significantly higher than $9, there are other methods outlined in PS LA 2008/4 (GA) that you can use, including absorption costing, market selling value and replacement value.
Assessable income
If the value of your closing stock is greater than the value of opening stock, you must include the amount of the difference in your assessable income.
However, if you have 500 hives at the start of the year and 500 hives at the end of the year, the difference in value will be nil (that is, $4,500 closing value minus $4,500 opening value).
First year valuations
In the first year you value trading stock, the opening value is nil.
At the end of the year, the value of your 500 hives is $4,500 if you use the average industry cost of $9 per hive. This might mean you have an additional $4,500 of assessable income to include in your tax return.
However, if you are a small business entity because the difference between the opening value of $0 and the closing value of $4,500 is less than $5,000 you don't need to account for the difference in your tax return.
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Last Modified: Friday, 15 February 2013