Non-specified livestock is defined as being “livestock other than bloodstock, high-priced livestock, and specified livestock” which includes all livestock other than dairy cattle, beef cattle, sheep, deer, pigs, goats, standard bred or thoroughbred horses. Examples of non-specified livestock include dogs, chickens, turkeys, ostriches, emus, llamas, alpacas, cats, etc. It would also include horses that are not bloodstock or standard bred.

There are four valuation methods you can use for non-specified livestock. They are:

• market value;
• replacement value;
• cost; or
• where the Commissioner agrees, standard value.

Market value and replacement value are often considered to be essentially the same thing. Market value is the “the current selling value in the relevant taxpayer’s own selling market” and replacement value is the “the current price at balance date when immediate replacement is possible”. Although the definitions are very similar, differences may occur where there are extreme differences between supply and demand. If you use market or replacement values, a valuation certificate should be provided by a competent and independent valuer. The certificate should include the date, stock classes, quantities, and either the market value or replacement market value price as at balance date. Homebred livestock is often valued using market or replacement values.

Standard values are where the Commissioner determines a valuation for that type of livestock and is likely to be based on average market value. The standard value would be set at a similar value to the market value to avoid any unduly high or low values being set. This is not a common valuation method and is rarely approved by the Commissioner.

The cost valuation method is less frequently used due to the complexity of its calculations. The cost is what the taxpayer has paid for the animal, but if livestock has been bred, a lengthy formula is required to calculate ‘cost’. The cost calculations are complex in comparison to the market or replacement value options. This increases compliance costs, and it would generally only provide tax benefits where the costs of production are well below industry average.

You can choose between all four valuation options and these are applied on a ‘type’ rather than ‘class’ basis. For example, if a farmer chooses to use market value for valuing alpaca, all alpaca’s must be valued at market value. However, if the farmer also has emus, these can be valued using any of the four methods – it doesn’t have to be the market value used for the alpacas.