INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 2 - Income  

Subdivision B - Trading Stock  

SECTION 32A   HORSE BREEDING STOCK - VALUE AT END OF YEAR OF INCOME  

32A(1)   Section applies to horse breeding stock.  

This section applies in determining the value of live stock to be taken into account at the end of the year of income if the live stock is horse breeding stock of the taxpayer at the end of the year of income.

32A(1A)   [Application ceases]  

This section does not apply to the valuation of horse breeding stock at the end of the 1997-98 year of income or at the end of a later year of income.

Note:

Section 70-45 (Value of trading stock at end of year) or 70-60 (Valuation of horse breeding stock) of the Income Tax Assessment Act 1997 applies to such a valuation.

32A(2)   Option as to value.  

Subject to subsections (3) and (4), the value of live stock to be taken into account at the end of the year of income is to be, at the option of the taxpayer:


(a) the special closing value of the live stock in relation to the year of income; or


(b) the cost price of the live stock; or


(c) the market selling value of the live stock.

32A(3)   Adoption of other value.  

If the Commissioner is satisfied that there are circumstances which justify the adoption by the taxpayer of some other value, the taxpayer may adopt that other value.

32A(4)   Option not exercised - value is cost price.  

If the taxpayer does not exercise the option within the time prescribed, the value of the live stock to be taken into account at the end of the year of income is to be the cost price of the live stock.

32A(5)   What is horse breeding stock.  

For the purposes of this section, live stock is horse breeding stock of a taxpayer at the end of the year of income if, and only if:


(a) the live stock is a horse acquired by the taxpayer under a contract; and


(b) the horse has attained the age of 3 years before the end of the year of income; and


(c) at the end of the year of income, the horse is held by the taxpayer for breeding purposes.

32A(6)   Special closing value.  

The special closing value of a horse in relation to a year of income is:


(a) if the horse is a female horse which has attained the age of 12 years before the end of the year of income - $1; or


(b) if the reduction amount in relation to the horse in relation to the year of income is equal to or greater than the opening value of the horse in relation to the year of income - $1; or


(c) in any other case - the amount worked out using the formula:


Opening value   -   Reduction amount


where:
  • ``Opening value'' means the opening value in relation to the horse in relation to the year of income;
  • ``Reduction amount'' means the reduction amount in relation to the horse in relation to the year of income.
  • 32A(7)   Opening value.  

    For the purposes of this section, the opening value in relation to a horse in relation to a year of income (the ``current year of income'' ) is:


    (a) if:


    (i) the horse was live stock of the taxpayer at the end of the year of income immediately preceding the current year of income; and

    (ii) the horse was live stock of the taxpayer during the whole of the current year of income;
    the value of the horse taken into account at the end of the preceding year of income; or


    (b) if the horse became live stock of the taxpayer at a time during the current year of income - whichever is the lesser of:


    (i) the cost price of the horse; or

    (ii) the depreciated value of the horse, within the meaning of section 62 , at that time.

    32A(8)   Reduction amount - male horse.  

    For the purposes of this section, the reduction amount in relation to a male horse in relation to the year of income is the amount worked out using the formula:


    Base amount × Nominated percentage ×   Holding days in
      year of income  
    Total days in year
        of income

    where:

    ``Base amount'' means whichever is the lesser of:

  • (a) the cost price of the horse; or
  • (b) the depreciated value of the horse, within the meaning of section 62, at the time the horse became live stock of the taxpayer;
  • ``Nominated percentage'' means the percentage, not exceeding 25%, nominated by the taxpayer at the same time as the taxpayer selects the option referred to in paragraph (2)(a);

    ``Holding days in year of income'' means:

  • (a) if the horse was held by the taxpayer for breeding purposes during the whole of the year of income - the number of days in the year of income; or
  • (b) if the taxpayer commenced to hold the horse for breeding purposes during the year of income - the number of whole days in so much of the year of income as occurred after that commencement;
  • ``Total days in year of income'' means the number of days in the year of income.

    32A(9)   Reduction amount - female horse less than 12 years old.  

    If a female horse has not attained the age of 12 years before the end of the year of income, then, for the purposes of this section, the reduction amount in relation to the horse in relation to the year of income is worked out using the formula:


      Base amount  
    Reducing factor
      × Holding days in year of income
      Total days in year of income

    where:

    ``Base amount'' means whichever is the lesser of:

  • (a) the cost price of the horse; or
  • (b) the depreciated value of the horse, within the meaning of section 62, at the time the horse became live stock of the taxpayer;
  • ``Reducing factor'' means whichever is the greater of:

  • (a) 3; or
  • (b) the difference between 12 and the number of whole years in the age attained by the horse on the day on which the horse commenced to be held by the taxpayer for breeding purposes;
  • ``Holding days in year of income'' means:

  • (a) if the horse was held by the taxpayer for breeding purposes during the whole of the year of income - the number of days in the year of income; or
  • (b) if the taxpayer commenced to hold the horse for breeding purposes during the year of income - the number of whole days in so much of the year of income as occurred after that commencement;
  • ``Total days in year of income'' means the number of days in the year of income.

    32A(10)   Age of horse.  

    For the purposes of this section, the time when a horse attains a particular age expressed in years is the commencement of the relevant anniversary of the birth date of the horse.

    32A(11)   Horse becoming live stock more than once before end of year of income.  

    For the purposes of this section, if a horse becomes live stock of the taxpayer more than once before the end of the year of income, the horse is taken to have become live stock of the taxpayer on the last occasion before the end of the year of income on which it became live stock of the taxpayer.

    32A(12)   Horse commencing to be held for breeding purposes more than once before end of year of income.  

    For the purposes of this section, if the taxpayer commences to hold a horse for breeding purposes more than once before the end of the year of income, the taxpayer is taken to have commenced to hold the horse for breeding purposes on the last occasion before the end of the year of income on which the taxpayer commenced to hold the horse for breeding purposes.

    32A(13)   Definitions.  

    In this section:

    "birth date"
    :


    (a) in relation to a horse foaled on or after 1 August in a calendar year - means 1 August in that year; and


    (b) in relation to a horse foaled before 1 August in a calendar year - means 1 August in the preceding year;

    "horse breeding stock"
    has the meaning given by subsection (5);

    "opening value"
    has the meaning given by subsection (7);

    "reduction amount"
    has the meaning given by whichever of subsections (8) and (9) is applicable;

    "special closing value"
    has the meaning given by subsection (6).


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