Preamble
Yes, freshwater crayfish are 'trading stock' as defined in subsection 70-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997) [1] because they are livestock.
You may use a reasonable estimate of the number of freshwater crayfish to value your trading stock on hand at the end of the financial year, based on: (a) the weight of the freshwater crayfish on hand to specific volume of water, or (b) the number of original parent stock and any introduced parent stock.
The basis of estimating the closing number of freshwater crayfish is one that is most likely to reflect the quantity of freshwater crayfish you have on hand. The approach should not be changed unless you can demonstrate that another approach would be more accurate.
This Determination applies to income years commencing both before and after its date of issue. This Determination will not apply to taxpayers to the extent that it conflicts with dispute settlement terms agreed to before the date of issue of this Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).
Appendix 1 - Explanation
The term 'trading stock' includes 'live stock' at paragraph 70-10(1)(b) of the ITAA 1997.
'Live stock' is defined in subsection 995-1(1) and excludes 'animals used as beasts of burden or working beasts in a business other than a primary production business'. This definition is essentially unchanged from the former definition of 'live stock' in subsection 6(1) of the Income Tax Assessment Act 1936.
In the context of the former definition, the High Court considers that, by inference, 'live stock' includes all animals used in a business of primary production. [2] Freshwater crayfish, being crustaceans, are animals. [3]
A 'primary production business' includes a business of 'maintaining animals for the purpose of selling them or their bodily produce (including natural increase)'. [4]
A business of keeping and raising freshwater crayfish for sale falls within the definition of 'primary production business'.
Accordingly, freshwater crayfish produced for sale are 'live stock' and fall within the definition of 'trading stock'.
We recognise that quantifying freshwater crayfish on hand at the end of the financial year is difficult because the population fluctuates. [5]
We will therefore accept the following industry-based methods of quantifying freshwater crayfish on hand at the end of a financial year as a reasonable basis to value trading stock for the purposes of section 70-35: • an estimate using a specific weight of livestock in a given volume of water, applying that ratio to the whole pond or dam, and valuing on the total estimated number, or • valuing the number of original parent stock, plus any introduced parent stock, and adopting this total value as the closing stock on hand at each year end for the life of the farm or hatchery.
You must adopt the approach most likely to reflect the quantity of freshwater crayfish you have on hand. The approach should not be changed unless you can demonstrate that another approach would be more accurate.