Natural increases of stock during the year can be valued at cost, market selling value or replacement value. Cost is whichever of the following you elect:
- actual cost of the animal, or
- cost prescribed by the regulations (cattle, horses and deer $20; pigs $12; emus $8; goats and sheep $4; poultry 35 cents).
You must value a horse acquired by natural increase and included in livestock on hand at a cost not less than the insemination service fee attributable to acquiring the horse.
If you are a small business entity, you can choose whether or not to conduct a stocktake and account for changes in the value of trading stock if there is a difference of $5,000 or less between:
- the value of your stock on hand at the start of the income year, and
- a reasonable estimate of the value of your stock on hand at the end of that year.
If the difference is more than $5,000, you must conduct a stocktake and account for changes in the value of your trading stock at the end of the income year.
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You can elect to spread profit from the forced disposal or death of livestock over a period of five years (or 10 years if the forced disposal was in relation to the control of bovine tuberculosis).
Alternatively, you can elect to defer the profit and to use it to reduce the cost of replacement livestock in the disposal year or any of the next five income years, any unused part of the profit being included in assessable income in the fifth income year.
An election to spread or defer profits can be made where:
- land is compulsorily acquired or resumed under an Act
- a State or Territory leases land for a cattle tick eradication campaign
- pasture or fodder is destroyed by fire, drought or flood and the proceeds of the disposal or death will be used mainly to buy replacement stock or to maintain breeding stock for the purpose of replacing the livestock
- livestock are compulsorily destroyed under an Australian law for the control of a disease (including bovine tuberculosis) or they die of such a disease
- official notification is received under an Australian law dealing with contamination of property.
Insurance recoveries for loss of livestock or for loss by fire of trees that were assets of a primary production business carried on in Australia may, following an election, be included in assessable income in equal instalments over five years.
Tax relief is available in relation to the proceeds of the sale of two wool clips arising in an income year because of an early shearing caused by drought, fire or flood. A wool grower can elect to defer the profit on the sale of the wool clip from the advanced shearing to the succeeding year.
Last Modified: Tuesday, 12 August 2008