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Yes, bees kept for use in a honey production business are trading stock as defined in section 70-10 of the Income Tax Assessment Act 1997 (ITAA 1997) [1] because they are livestock.

This Determination applies to years of income commencing both before and after its date of issue. However, the Determination will not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).

Section 70-10 states that trading stock includes: (a) anything produced, manufactured or acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of a business; and (b) live stock.

The use of the word 'includes' in the definition of trading stock in section 70-10 signifies that a thing may be trading stock for the purposes of the provision if it meets the requirements in paragraphs 70-10(a) or 70-10(b) or is otherwise trading stock within the ordinary meaning of that term. [2]

The term 'live stock' is defined in subsection 995-1(1) to 'not include animals used as beasts of burden or working beasts in a *business other than a *primary production business'. [3] The High Court in Federal Commissioner of Taxation v. Wade [4] considered this definition of 'live stock' when it was then found in subsection 6(1) of the Income Tax Assessment Act 1936. Dixon and Fullagar JJ stated that the definition, by inference, makes it clear that all animals used in a primary production business are included as live stock. [5]

Bees, being insects, are animals. [6] Paragraph (b) of the definition of 'primary production business' in subsection 995-1(1) includes as a primary production business a business of 'maintaining animals for the purpose of selling them or their bodily produce (including natural increase)'. Honey is the bodily produce of bees. [7] A business of keeping bees for the production and sale of honey is a 'primary production business' as defined in subsection 995-1(1) and the bees kept for use in that honey production business are live stock.

As bees kept for use in a honey production business are live stock, they are trading stock as defined in section 70-10. [8]