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  • Valuing livestock

    Stock on hand

    You are required to value your livestock at the end of each year as part of determining your net income from primary production.

    You can choose to value livestock on hand at the end of the income year at cost, market selling value or replacement value. An additional option is available for certain horse breeding stock.

    You may change the basis of valuation year by year and different valuation bases may be adopted for individual livestock. The value of your opening livestock on hand on 1 July 2020 should be the same as the value of your closing stock on 30 June 2020 that you used for your 2019–20 tax return.

    Small business entities

    You do not have to value each item of trading stock (including livestock) on hand at the end of 2020–21 or account for changes in the value of your trading stock for 2019–20 if:

    • you were a small business entity for 2020–21
    • you choose to access the simplified trading stock rules, and
    • the difference between the value of all trading stock on hand at the start of 2020–21 and the value you reasonably estimate of all your trading stock on hand at the end of 2020–21 is not more than $5,000.

    However, if you prefer, you can still conduct a stocktake and account for changes in the value of trading stock for 2020–21 even if the difference is not more than $5,000.

    Oyster farmers

    Oyster farmers are required to account for oysters on hand as trading stock. This includes oysters held on sticks, in trays or harvested and held ready for sale.

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    Bees

    Entities carrying on a business of beekeeping for the purpose of honey production are required to account for bees on hand as trading stock. You may be eligible to use a simplified practice of valuing a live hive rather than accounting for the individual bees.

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    Goods taken from stock for private use

    If you take goods from stock for your own use, or for the use of your family members, you are required to account for the goods as if the stock had been disposed of at its cost.

    This includes the situation where a grazier slaughters livestock for personal consumption or for rations for employees.

    Natural increase

    The cost of an animal you hold as livestock that you acquired by natural increase is whichever of these 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.
       

    If your business involves breeding exotic animals (for example, ostriches or alpacas) phone 13 28 66 to confirm the appropriate cost.

    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.

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    Abnormal receipts

    In this section:

    Grants and subsidies

    Generally, amounts received by way of grants or subsidies will be assessable either as ordinary income or statutory income. However, in certain circumstances, a specific grant or payment is considered to be exempt income or non-assessable non-exempt income.

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    Profit from forced disposal or death of livestock

    You can elect to spread profit from the forced disposal or death of livestock over a period of five years. Alternatively, you can elect to defer the profit and 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 is included in assessable income in the fifth income year.

    An election to spread or defer profits can be made where you dispose of the stock, or they die, because:

    • 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 you will use the proceeds of the disposal or death mainly to buy replacement stock or maintain breeding stock for the purpose of replacing the livestock
    • they are compulsorily destroyed under an Australian law for the control of a disease (including bovine tuberculosis) or they die of such a disease, or
    • you receive official notification under an Australian law dealing with contamination of property.

    Insurance recoveries

    Where you have an assessable insurance recovery for loss of livestock or loss by fire of trees that were assets of a primary production business carried on in Australia, you can elect to include the amount in assessable income in equal instalments over five years.

    Double wool clips

    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 clip from the advanced shearing to the next year.

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    Last modified: 27 May 2021QC 64899