| Summary: | This paper is a synopsis of the book Tax Accounting and Livestock in Australia: Insights from
the Wade Case. The book is a detailed examination of the taxation implications of the disposal
of animals held in a business of primary production in conjunction with the sale of a farm or
pastoral lease.
In the pastoral and farming industries, valuable stud animals are not normally sold as trading
stock but, as a consequence of a natural or family disaster, they may need to be disposed of
against the will of the owners. In Australia, the Australian Taxation Office (ATO)’s view is that
the revenue from the sale of all animals held as part of a primary production business is income
according to ordinary concepts, regardless of the function of those animals in the business or
the reasons for sale, and the receipts are taxed as ordinary income. That view deprives owners
of a raft of tax concessions granted to other business owners on the sale of their businesses.
The authors consider this situation to be grossly unfair to pastoralists, farmers and graziers if
they are forced to sell their breeding stock as a result of a natural disaster or along with the
sale of their business on their retirement from the industry.
The book looks at how the ATO’s view was established and why it came into being. It looks at
the basis on which the ATO formed its view and examines the litigation which the ATO uses to
support its opinion – Federal Commissioner of Taxation v Wade (‘Wade Case’). It then
examines the background of the Wade Case in detail, and the court documents presented in the
preceding trial and administrative reviews
|
|---|