The section has a wide embrace, both as to the farmer affected and the class of livestock. “The main provision of this section is that every farmer is bound to include in the return rendered by him for income tax purposes, i.e., for the determination of his taxable income, the values of all livestock and produce held by him and not disposed of at the beginning and end of each year of assessment. This was confirmed in R Koster & Son (Pty) Ltd & another v CIR in which the court cited with approval the following passage from Farmer v COT 1944 SR 80, 13 SATC 158 at 159 in which this principle was upheld in relation to equivalent provisions of the Southern Rhodesia Income Tax Act: Once an animal is classified as livestock any consideration received or accrued on its disposal must be included in the farmer’s gross income regardless of whether the animal was acquired as fixed capital or floating capital. The value of livestock held and not disposed of at the end of the year of assessment (“closing stock”) is included in income and the value of livestock held and not disposed of at the beginning of the year of assessment (“opening stock”) is allowed as a deduction from income. The general rule in paragraph 2 is that all farmers, including companies carrying on farming operations, are required to include in their tax returns the value of their livestock held and not disposed of at the beginning and at the end of each year of assessment. The livestock must be used in the farming operations to fall within the ambit of the First Schedule. This is a general term which comprises any animals kept or dealt in for use or profit.”Livestock thus includes animals held for breeding purposes (often referred to as fixed capital assets) and those held for resale (often referred to as floating capital assets).

“Paragraph 2 of the First Schedule refers to all livestock. The above meaning was confirmed in relation to the First Schedule in R Koster & Son (Pty) Ltd and another v CIR 1985 (2) SA 831 (A), 47 SATC 23 at 32 in which Nicholas JA stated the following: “animals kept or dealt in for use or profit”. The word is described in the New Shorter Oxford English Dictionary as –17 The word “livestock” is not defined in the First Schedule or the main body of the Act. Various paragraphs of the First Schedule apply to livestock.

Livestock wallap