Animals and Trading Stock

Q&A Tax

Question :

Marry owns a property in the Blue Mountains that is used as a tourist resort.

Please advise Marry whether these following items should be treated as trading stock?
1. Animals such as horses, sheep, goats, ducks and chickens that are held to entertain tourists on its property
2. Guard dogs that petrol the tourist resort


Answer :

Trading stock is defined in ITAA1997 s 70-10 as including anything produced, manufactured or acquired that is held for the
purposes of manufacture, sale or exchange in the ordinary course of business. Trading stock is basically the things in which a
business trade.

The definition in s 70 – 10 specifically includes livestock, but animals used as beasts of burden or working beasts in a nonprimary production business are specifically excluded from being ‘livestock’.

In this sense, the animals held for entertaining tourists would not be trading stock. In ID 2008/25, the Commissioner states
that birds for display in a tourist park are not trading stock.

Accordingly, guard dogs are working beasts, which are not trading stock unless they are used in a primary production business.

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