Livestock Valuation Elections

Under the current legislation, it is easy to swap between the Herd Scheme and National Standard Cost (NSC) livestock valuation methods.  An officials’ issues paper has been released focusing on the Government’s concerns about farmers having the ability to switch between the methods to derive tax-free gains when livestock values are increasing, or tax-deductible write-downs when livestock values are decreasing.

Government officials have suggested that the following changes be made:

• Once a farmer has elected to use the Herd Scheme, the election is irrevocable, or
• Livestock election timeframes be altered to reduce advantages that can be acquired by farmers under the existing election framework.

Under the first alternative, any election would survive transfers between associated persons, to remove the ability to work around the changes by using multiple entities.

Lastly, the IRD proposes that the ability to use certain valuations, when trading ceases, should also become more restrictive.

Richard Ashby
Director

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