Just specify what options are available for stan NOW. 6. Returns and Assessments
ID: 2601593 • Letter: J
Question
Just specify what options are available for stan NOW.
6. Returns and Assessments - Rulings Systems Stan Dobie, a primary producer, breeds crocodiles. He has received an insurance settlement for the loss of several crocodiles from floodwater contamination. Stan wishes to utilise s.385-130 and spread the insurance recovery. However, his tax agent has advised him that, while he does breed crocodiles, his income comes from allowing tourists to visit his farm and hatchery, and he is therefore not a primary producer. Stan is not convinced but is aware of his need to take 'reasonable care' in attending to his taxation affairs. Advise Stan on the options available to him in determining whether he is a primary producer. Refer specifically to the ruling system and how it could be utilised by Stan.Explanation / Answer
If Stan is a primary producer, he has the option of valuing his livestock at the end of the year. so that he can determine his net income from the primary production of breeding crocodiles.
Livestock can be valued by him at market selling price, cost or replacement value. He can change the valuation every year.
In the same year, he may change the method of valuing his stock.
the cost of crocodile he hold as a livestock is can the actual cost of crocodile or the cost prescribed by the regulations.
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