- 7 Feb - PAYE, Terminal Tax, FBT (5th on weekend)
- 20 Feb - PAYE, RWT, N-RWT
- 28 Feb - GST, Prov Tax
Livestock Valuation - Herd Scheme
In the 2011 Budget the Government signaled that a review would be undertaken of the rules around the valuation of livestock for tax. The review would look at problems that have arisen around livestock valuation elections and the flexibility within the application of the rules.
The Herd Scheme valuation method is the method of most concern to the Government due to farmers ability to switch in and out of the scheme. In theory these rules enable a farming business to record a tax-free herd scheme gain when livestock values are increasing and tax deductible write down when values are decreasing. However the practical application of these rules are far more complex.
The current system allows for an inequitable situation amongst taxpayers as no other business is able to value a major asset (trading stock) as a capital asset in one year and trading stock in another in this same fashion.
The economic cost to the Government was highlighted when dairy cow values peaked in 2007/08. The estimated cost for the year was $100 million in lost tax revenue from the use of the herd scheme.
Inland Revenue has released an issues paper which offers some suggested changes to the regime which will restrict switching from different valuation methods. The suggested changes presented are intended to strike a balance between fairness for all taxpayers and fairness for farmers.
The focus of the review is centered squarely at the Friesian dairy cow due to the volatility of the market values for these animals. However the review will encompass all specified livestock types.
For more information on the review please contact your advisor.