| Summary: | This article provides a comprehensive
examination of the tax accounting treatment
of livestock in Australian primary production
businesses. Contrary to the established practice
of categorising all livestock as trading stock,
the authors propose an alternative approach,
advocating for the recognition of stud or breeding
livestock as capital assets. Through a thorough
investigation of historical legal cases, particularly
FCT v Wade, and legislative changes such as the
repeal of s 17 of the Income Tax Assessment Act
1922, the authors challenge the current viewpoint
upheld by the ATO since 1951. They suggest
practical measures for tax preparers to capitalise
breeding animals, enabling them to benefit from
CGT concessions. Despite potential challenges in
record-keeping and expense deduction, the study
emphasises the financial advantages and fairness
in aligning tax treatment with the true nature of
livestock in primary production businesses.
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