Ascertainment of income of farmers in relation to stock.
(1)
The stock owned by a farmer at the beginning and end of each period for
which he makes up the accounts of his farming business shall. in
computing the gains or profits from that business, be taken into account
at the value which the Commissioner may determine to be just and
reasonable.(2)
An election duly made by a farmer under section 16 of the
Management Act shall be binding upon him for all subsequent years of income
in which he carries on the business of farming; but on application in writing by
the farmer, the Commissioner may, subject to any adjustment that he may
consider appropriate, permit a farmer who has elected not to take into account
the value of stock to revoke his election with effect from the year of income
prior to that in which the application is made. (3)
Subject to subsection (4), a farmer who has elected not to take
into account the value of stock shall be charged for each year of income on all
amounts received for stock disposed of by him in any circumstances and
whether or not the proceeds thereof would, but for this section, be regarded as
capital receipt; and, if a part of the stock is disposed of otherwise than in the
open market, he shall be charged on the cost or open market value of that stock,
whichever is the lesser, so, however, that in no case shall he be charged on less
than the amount received for that stock: - Provided that if the sale of any stock has been undertaken as part of the operations involved in changing from one type of farming to another and the whole or part of the amounts received therefrom has been expended in purchasing stock of a different kind, or on purposes essential to that change where no deduction is allowable under the Second Schedule in respect of that expenditure, the amounts so received, to the extent to which they are so expended, and the amount so expended, shall be disregarded for the purposes of ascertaining his total income for a year of income.
(4)
Where a farmer who has elected not to take into account the value
of stock ceases to carry on the business of farming, the Commissioner in
ascertaining the farmer's total income for the year of income in which cessation
takes place, may make such adjustment as he may determine to be just and
reasonable in respect of the value of stock held by that farmer on 1st January,
1936, or on the date on which he commenced the business whichever date is the later.(5)
A farmer who has elected not to take into account the value of
stock shall furnish, when the Commissioner so requires, a statement setting out
to the best of his knowledge and belief the value of the stock held by him at any
date relevant for the purposes of this section. (6)
Subject to any adjustment referred to in subsection (4) and to
such adjustments as the Commissioner would have considered appropriate had
an application been received under subsection (2), the executors or
administrators of a farmer who has elected not to take into account the value of
stock and who dies while carrying on a business of farming shall be charged in
respect of stock belonging to the deceased farmer at the time of his death - - (a) if sold in the open market, on the realized price;
- (b) if transferred without payment to a beneficiary under the will or on the intestacy of the deceased farmer, on the open market value; but where the beneficiary succeeds to that business of farming and elects, by notice in writing to the Commissioner within one year after the end of the year of income in which the farmer dies, not to take into account the value of stock -
- (i) no amount shall be charged on the executors or administrators in respect of the stock transferred to him;
- (ii) this section shall be applied to the beneficiary as if he had carried on the business of farming throughout the whole period from the date on which the deceased farmer commenced that business and had made the election which the deceased farmer made;
- (c) in any other case, on the open market value, as if that price or value had been income of the farmer for the year of income in which he died.
(7)
In this section "stock" means all livestock and produce, and crops
which have been harvested.
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